Question

A tariff is best defined as:

Options

• A tax levied on imported goods to make them costlier than domestic alternatives

• A limit placed on the quantity of goods that can be imported

• A subsidy given to domestic producers for exporting goods

• A licence required before a factory can be set up

Answer 1

A tariff is a tax levied on imported goods. Its purpose is to make imported goods costlier than domestic alternatives, thereby encouraging consumers to buy domestically produced goods and protecting domestic industries.