Which of the Following Is the Best Example of a Tariff

question 16

Multiple Choice

Which of the following is the best example of a tariff?

• A) A subsidy from the government to domestic manufacturers of residential air conditioners to enable them to compete more effectively with foreign producers.
• B) A limit on the quantity of residential air conditioners that can be imported from a foreign country.
• C) A $150 fee imposed on all imported residential air conditioners.
• D) A tax placed on all residential air conditioners sold in the domestic market to help offset the impact of emissions on the environment.

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Definitions:

Deregulate

The process of removing or reducing government regulations or restrictions in an industry to allow for more freedom and competition.

Natural Monopoly

An industry in which economies of scale are so great that a single firm can produce the industry’s product at a lower average total cost than would be possible if more than one firm produced the product.

Horizontal Market

A market that appeals to a wide range of consumers across different industries or sectors.

Contestable Market

A market with no barriers to entry or exit, where a company's prices and output are constrained by the threat of new entrants or competition rather than by existing competitors alone.