Question

a tax levied on imported goods is called a(n): a. excise tax. b. tariff. c. quota. d. foreign profits tax.

Answer 1

A tax on imported goods is referred to as a tariff. These tariffs raise the cost of foreign goods, protecting domestic industries. Reducing tariffs typically leads to a lower market price and higher quantity demanded for the goods affected, such as flat screen TVs.

Step-by-step explanation:

A tax levied on imported goods is known as a tariff. Tariffs are used by many nations to generate revenue and provide a measure of protection for domestic industries by increasing the cost of imported goods, potentially making them less competitive in comparison to locally produced products. When the U.S. government reduces the tariff on imported goods, such as flat screen televisions, we can analyze the impact using a four-step analysis:

1. Analyze the current market equilibrium for flat screen TVs.
2. Consider that the tariff reduction decreases the cost for importers to bring foreign-made flat screen TVs into the country.
3. Predict that a decreased cost for importers will likely lead to a lower market price for flat screen TVs.
4. Conclude that the lower price will increase the quantity demanded by consumers, shifting the market equilibrium to a higher quantity and lower price.

Answer 2

A tax on imported goods is known as a tariff, used to raise revenue and protect domestic industries. A cut in tariffs on imported flat screen TVs would likely result in a lower equilibrium price and higher equilibrium quantity in the domestic market.

Step-by-step explanation:

The tax levied on imported goods is called a tariff. A tariff is a tool countries use to generate revenue and to protect domestic industries by making foreign goods more expensive in the domestic market.

If the U.S. government decides to cut tariffs on imported flat screen televisions, we can analyze the impact on the equilibrium price and quantity with a four-step analysis:

1. Determine the current market equilibrium with the existing tariff.
2. Understand that a reduction in the tariff decreases the cost for importers, which can lead to a decrease in market prices for flat screen TVs.
3. With lower prices, demand for flat screen TVs should increase, shifting the demand curve to the right.
4. The new equilibrium is established at the intersection of the new demand curve and the original supply curve, with a lower equilibrium price and higher equilibrium quantity of flat screen TVs in the domestic market.