When a specific tariff is used instead of an ad valorem tariff:
A)higher priced goods enjoy a greater degree of protection than cheaper goods
B)domestic consumers are encouraged to purchase cheaper goods
C)cheaper goods enjoy a greater degree of protection than higher priced goods
D)domestic producers enjoy a greater degree of protection in periods of rising prices

Question

Quizplus · Accepted Answer

When a specific tariff is used, the same fixed amount of duty is charged per unit of the commodity. Therefore, cheaper goods will have a greater degree of protection, as the percentage of the import price that is paid as duty will be higher. On the other hand, higher priced goods will have to pay a lower percentage of the import price as duty and thus will not enjoy as much protection.

When a Specific Tariff Is Used Instead of an Ad