Question

The prohibitive tariff is a tariff that A) is so high that it eliminates imports. B) is so high that it causes undue harm to trade-partner economies. C) is so high that it causes undue harm to import competing sectors. D) is so low that the government prohibits its use since it would lose an important revenue source.

Answer 1

A) is so high that it eliminates imports.

Step-by-step explanation:

Prohibitive tax is one that aims to discourage importers of a good from bringing them into a country.

The tax rate is so high that it will make no sense for the importer to bring in such products.

For example if the tax rate of a product is set to 500% tarrif levy, it will most likely not make sense to bring it into a country at all.

The final price that will be presented to the customer will be too high for the importer to sell.