Correct option is B
Match between the trade tariff types and their explanations:
· A. Specific Tariff: A specific tariff is levied as a fixed amount of money per unit of the imported good, regardless of its value. For example, $500 on each imported car or $2 per kilogram of sugar. Thus, A matches with II. Fixed amount of money per unit.
· B. Ad valorem Tariff: An ad valorem tariff is levied as a fixed percentage of the value of the imported good. For instance, a 10% levy on imported gadgets valued at $10,000 would be $1,000. Thus, B matches with I. Fixed percentage of the value of the commodity.
· C. Compound Tariff: A compound tariff combines both a specific tariff and an ad valorem tariff. It involves a fixed amount per unit plus a percentage of the value. For example, 5% of the item's worth plus $200 per unit. Thus, C matches with IV. Combination of Ad valorem and Specific Tariff.
· D. Variable Tariff: A variable tariff is a duty that is adjusted to bring the price of an imported commodity up to the level of the domestic support price for that commodity. This mechanism is often used in agriculture to protect domestic producers from lower-priced imports. Thus, D matches with III. Duty fixed to bring the price of imported commodity to the level of domestic support price
Information Booster:
Tariffs are a tool used by governments to regulate international trade by imposing taxes or duties on imported goods. The specific tariff is straightforward, imposing a fixed charge per unit of the good, whereas ad valorem tariffs are percentage-based, making them proportional to the value of the commodity. The compound tariff combines both methods, and the variable tariff is often used in situations where domestic prices need to be protected from fluctuations in global prices.
English
10 Questions
20 Marks
12 Mins
