A tariff that is a combination of an ad valorem and a specific tariff is a(n):
A)import tariff
B)export tariff
C)compound tariff
D)optimum tariff

Question

Quizplus · Accepted Answer

A compound tariff is a combination of both ad valorem and specific tariffs. In this type of tariff, a fixed fee is charged on every unit of a good imported, as well as a percentage of the value of the good. This enables the government to collect revenue on the unit quantity of a good imported as well as on the value of the good, making it a favorable choice. Moreover, it also helps protect domestic industries from fluctuating foreign prices. Therefore, a compound tariff is the best choice.

A Tariff That Is a Combination of an Ad Valorem