A country raises the tariff on imported cheese in order to increase its price above the price of domestically produced cheese. This is an example of ______.
A) an exchange control
B) an import quota
C) a protective tariff
D) dumping

Question

Quizplus · Accepted Answer

A protective tariff is a tax levied on imports to protect the domestic industry from foreign competition by raising the price of imported goods above the price of domestically produced goods. In this case, the country is raising the tariff on imported cheese to make the price of the imported cheese higher than the price of domestically produced cheese. This is a common strategy used by governments to support local producers and maintain the country's balance of payments. Import quotas limit the quantity of a particular good that can be imported, exchange controls restrict the outflow or inflow of foreign currency, and dumping refers to selling a product in a foreign market at a price lower than the production cost. None of these options accurately describe the scenario described in the question.

A Country Raises the Tariff on Imported Cheese in Order