Final answer:
Tariffs are taxes that countries levy on imports to raise revenue and protect domestic industries. Globalization can increase a firm's potential for outsourcing and lower unit production costs.
Step-by-step explanation:
Tariffs are taxes that countries levy on imports from other countries. They are used to raise revenue for the country and also to protect domestic industries by making foreign goods more expensive. For example, a country may impose a tariff on imported cars to encourage consumers to buy cars made domestically. Tariffs can vary in different countries and for different products.
On the other hand, tariffs are not taxes that countries levy on exports to other countries. Countries typically do not impose taxes on their own exports, as they want to promote their goods in international markets.
As a firm's degree of globalization increases, its potential for outsourcing internal capabilities for gain advantage with product design increases. Globalization allows firms to access a larger pool of talent and resources from different countries, enabling them to outsource certain aspects of their operations for competitive advantage. For example, a clothing company may outsource its manufacturing to a country with lower labor costs.
However, as a firm's degree of globalization increases, unit production costs do not necessarily increase. In fact, globalization can lead to economies of scale and cost efficiencies. By expanding operations globally, firms can benefit from lower production costs, such as cheaper raw materials or cheaper labor in certain countries. This can result in lower unit production costs and potentially higher profits for the company.