Tariffs Are a Popular Tax in Developing Countries Because of the

question 19

Multiple Choice

Tariffs are a popular tax in developing countries because of the

• A) long history of foreign trade in such countries.
• B) incidence of the tax, which is paid by exporters but rests on importers.
• C) observability of trade flows.
• D) strong political message such tariffs send.
• E) job creation that ensues because customs agents and inspectors are hired to collect the tariff.

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Definitions:

Total Utility

The total satisfaction a consumer receives from consuming a particular quantity of a good or service.

Budget Line

A graphical representation of all possible combinations of two goods that a consumer can purchase with a given budget at specific prices.

Purchase More

The action of buying an increased quantity of goods or services than previously acquired.

Marginal Utility

The additional contentment a customer derives by consuming one more unit of a product or service.