In a perfectly competitive market, a tariff:
A)is another term for an excise tax imposed on any good.
B)sets the price of an imported good.
C)is a tax on an imported good.
D)is the same as an import quota.

Question

Quizplus · Accepted Answer

A tariff is a tax imposed on a specific imported good. It is not the same as an excise tax, which is a tax imposed on all goods. Tariffs are not used to set prices, but rather to increase the cost of importing goods in order to protect domestic industries. An import quota is a limit on the quantity of a particular good that can be imported, and is not the same as a tariff. In a perfectly competitive market, a tariff is a tax on an imported good. It is designed to protect domestic producers by making imports more expensive, thereby making domestically produced goods relatively cheaper. This helps to reduce competition from foreign firms and protect jobs in the domestic economy.

In a Perfectly Competitive Market, a Tariff