An Effective Tariff Is the Sum of the Ad Valorem

question 21

True/False

An effective tariff is the sum of the ad valorem tariff plus the specific duty.

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Definitions:

Price Floor

A floor price established by the government or regulatory authority, representing the lowest legal selling price for a specific product or service.

Market Efficiency

The degree to which stock prices reflect all available, relevant information, making it impossible to consistently achieve higher returns.

Surplus

A situation where the quantity of a product or service supplied exceeds the quantity demanded at the current price.

Binding Price Floor

An enforced price limit by authorities that prevents prices from falling below a certain level, causing excess supply.