CA Foundation · Business Economics · International Trade
A specific tariff differs from an ad valorem tariff in that a specific tariff is:
A specific tariff is a fixed amount of duty levied per unit of the imported good, such as ₹500 per tonne, whatever its price. An ad valorem tariff is instead a percentage of the good's value, so the two differ in how the duty is computed.
- AA fixed amount of duty charged per unit of the imported good, irrespective of its priceCorrect
- BA duty charged as a percentage of the value of the imported good
- CA limit on the number of units that may be imported in a year
- DA subsidy paid to domestic producers per unit sold
Explanation
A specific tariff is a fixed rupee amount per physical unit (for example, ₹500 per tonne), regardless of the price. A percentage of value describes an ad valorem tariff, which is the key distractor. A limit on quantity is a quota, and a per-unit payment to producers is a subsidy.
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