ECONOMICS
TECHNOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Imposed taxes make the imported goods more expensive; causing people to purchase locally made products
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It sets a limit on the number of goods imported so the local goods are cheaper
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It prohibits the sale of all foreign made goods in a country
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It sets a limit on the amount you can charge for a foreign made product
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Detailed explanation-1: -Tariffs are a way for governments to not only collect revenue but also protect domestic businesses. Tariffs increase the price of imported goods, making domestic goods cheaper in comparison.
Detailed explanation-2: -Tariffs have three primary functions: to serve as a source of revenue, to protect domestic industries, and to remedy trade distortions (punitive function). The revenue function comes from the fact that the income from tariffs provides governments with a source of funding.
Detailed explanation-3: -Because a tariff is a tax, the government will see increased revenue as imports enter the domestic market. Domestic industries also benefit from a reduction in competition, since import prices are artificially inflated.
Detailed explanation-4: -The imposition of high tariffs translates to higher prices, affecting the consumer’s consumption because it is them that have to pay for the tax levied on the imported commodity. The high tariffs also cause a decline in the supply of imports due to the decline in demand from the consumers of the importing country.
Detailed explanation-5: -Tariffs are taxes imposed on the imports by a country for providing protection to its domestic industries.