The Optimum Tariff Is Most Likely to Apply to

question 26

Multiple Choice

The optimum tariff is most likely to apply to

• A) a small tariff imposed by a small country.
• B) a small tariff imposed by a large country.
• C) a large tariff imposed by a small country.
• D) a large tariff imposed by a large country.
• E) an ad valorem tariff on a small country.

---

Definitions:

Variable Production Cost

Variable production costs are expenses that change in proportion to the volume of goods or services produced, such as raw materials and labor costs.

Fixed Production Cost

Costs that do not vary with the level of production or sales volume, such as rent, salaries, and equipment depreciation.

Variable Selling Expense

Costs related to selling products that vary with the level of sales activity, such as commissions.

Net Operating Income

A company's income after operational expenses have been deducted but before taxes and interest are considered.