CA Foundation · Business Economics · International Trade
India imposes a specific tariff of ₹150 per unit on imported electric fans. The world price is ₹1,000 per fan and India is a small importer. After the tariff, India imports 40,000 fans. What is the tariff revenue collected, and the domestic price per fan?
Domestic price equals world price plus the tariff, so ₹1,000 + ₹150 = ₹1,150. Tariff revenue is the duty per unit times imports after the tariff, ₹150 × 40,000 = ₹60,00,000. So the answer is ₹60,00,000 revenue and a ₹1,150 price.
- A₹60,00,000 and ₹1,150Correct
- B₹60,00,000 and ₹1,000
- C₹1,50,000 and ₹1,150
- D₹4,00,00,000 and ₹1,150
Explanation
For a small country, domestic price = world price + tariff = 1,000 + 150 = ₹1,150. Revenue = tariff per unit × units imported = 150 × 40,000 = ₹60,00,000. Keeping the price at ₹1,000 ignores the tariff pass-through, and other revenue figures use wrong bases.
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