Asked by Tyasia Dennis on Jun 09, 2024
Verified
Which of the following is true?
A) An import quota generates government revenue.
B) Tariffs on imports generate government revenue as long as the domestic price is larger than the world price plus the tariff.
C) Tariffs on imports do not generate government revenue if the domestic price is larger than the world price plus the tariff.
D) Tariffs on imports never generate government revenue.
Import Quota
A government-imposed limit on the quantity of a specific type of good that can be imported into a country.
Domestic Price
The price of goods or services within a country's domestic market, potentially influenced by tariffs, taxes, and supply and demand.
Tariff
A tax imposed on imported goods, usually to protect domestic businesses and market from foreign competition.
- Understand the mechanisms and effects of tariffs and quotas on international trade.
Verified Answer
AE
Araceli EspinozaJun 09, 2024
Final Answer :
B
Explanation :
Tariffs on imports generate government revenue through the taxes collected on imported goods. This occurs when the domestic price of the goods, after adding the tariff, is still competitive, encouraging imports despite the additional cost.
Learning Objectives
- Understand the mechanisms and effects of tariffs and quotas on international trade.