ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business
A government imposes a tax on imported steel, calculated as a percentage of the import value, to make foreign steel more expensive than locally produced steel. What is this measure called?
This measure is a tariff. A tariff is a tax levied on imported goods, usually as a percentage of value, which raises the price of foreign products and makes domestic goods more competitive. It differs from quotas, which limit quantities, and from embargoes, which ban trade.
- AA tariffCorrect
- BA quota
- CAn embargo
- DA subsidy
Explanation
A tariff is a tax on imported goods, which raises their price relative to domestic products. A quota limits quantity rather than adding a tax. An embargo is a ban on trade, and a subsidy is financial support to domestic producers.
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