Assume That the United States Imports Automobiles from South Korea

question 30

Multiple Choice

Assume that the United States imports automobiles from South Korea at a price of $20,000 per vehicle and that these vehicles are subject to an import tariff of 20 percent. Also assume that U.S. components are used in the vehicles assembled by South Korea and that these components have a value of $10,000.
-Refer to Exhibit 4.1.In the absence of the Offshore Assembly Provision of U.S.tariff policy, the price of an imported vehicle to the U.S.consumer after the tariff has been levied is

• A) $22,000.
• B) $23,000.
• C) $24,000.
• D) $25,000.

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Definitions:

Net Income

The net income of a business following the deduction of all expenditures and taxes from its total revenue.

Owners' Equity

The residual interest in the assets of a company after deducting liabilities, representing what the owners own outright.

Investment

The process of distributing funds with the goal of earning revenue or gains.

Acid Test Ratio

A financial metric that measures a company's ability to pay off its short-term liabilities with its quick assets.