If Brazil levies a tariff on oil that is so high that it effectively prohibits imports of oil, the tariff has
A) only a protective effect.
B) only a revenue effect.
C) both a revenue effect and a protective effect.
D) no effect on trade.

Question

Quizplus · Accepted Answer

A tariff that effectively prohibits imports of oil would primarily have a protective effect by shielding domestic industries from foreign competition. Since no oil is imported due to the high tariff, there would be no revenue generated from the tariff, eliminating the revenue effect.

If Brazil Levies a Tariff on Oil That Is So