Suppose that Canada levies a tariff on imports that is a fixed percentage of the product's price.This refers to
A) a compound tariff.
B) an ad valorem tariff.
C) a specific tariff.
D) an effective tariff.

Question

Quizplus · Accepted Answer

An ad valorem tariff is a percentage of the product's price, whereas a compound tariff includes both a specific and ad valorem component. A specific tariff is a fixed amount per unit of the product, and an effective tariff refers to the combined impact of the tariff and any other trade barriers. Therefore, the best choice for a tariff levied as a fixed percentage of the product's price is an ad valorem tariff.

Suppose That Canada Levies a Tariff on Imports That Is