Question

Governments, for many​ reasons, often intervene in international​ markets, offsetting some of the efficiencies that may be realized with specialization based on comparative advantage and trade.

When governments imposes a tax on​ imports, this is knows as:

a. a quota.
b. a tariff.
c. an export subsidy.
d. dumping.

Answer 1

The correct answer is option b.

Step-by-step explanation:

A tariff is a tax imposed on the imports of a product. It is used to restricts imports from another country by increasing the price of goods and services. Tariffs are generally of two types:

• Specific tariff
• Ad-valorem tariff

A quota is a quantitative restriction on imports of goods and services. An export subsidy is a type of subsidy that is paid to the domestic producers to encourage exports.

Dumping is a situation when a country, a firm or an industry sells a product in a foreign market at a lower price than what it charges in domestic market.