A tariff can be described as ____. The purpose of a tariff is to protect ___. A)

Question

A tariff can be described as ____. The purpose of a tariff is to protect ___.

A) either a tax on or a limit on the quantity of an imported good; domestic producers from foreign competition by raising the domestic price of the good.

B) either a tax on or a imit on the quantity of an imported good; domestic consumers from foreign competition by lowering the domestic price of the good.

C) a tax on an imported good; domestic consumers from foreign competition by lowering the domestic price of the good.

D) a tax on an imported good; domestic producers from foreign competition by raising the domestic price of the good.

Explanation / Answer

a tariff is a tax on imported goods while quota is a limit on the quantity of imports.

Thus, we can eliminate choices a and b.

A tariff will increase the price of the imported good and thus protect the local producers as their goods will be cheaper.

Thus correct choice is d. a tax on an imported good; domestic producers from foreign competition by raising the domestic price of the (imported) good

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