The Difference Between a Specific Tariff and an Ad Valorem

question 172

Multiple Choice

The difference between a specific tariff and an ad valorem tariff is that a specific tariff

• A)is a set amount of money per unit of a product, while an ad valorem tariff is a set percentage of product price
• B)is a set percentage of product price, while an ad valorem tariff is a set amount of money per unit of a product
• C)names a particular good to which the tariff applies, while an ad valorem tariff applies to large classes of products
• D)applies only to imports, while an ad valorem tariff applies only to exports
• E)sets a strict quota limit on the amount one individual can purchase, while an ad valorem tariff sets no such limit

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Definitions:

Price Ceiling

A price ceiling is a government-imposed limit on the price that can be charged for a product or service, intended to prevent prices from rising too high.

Low-Income People

Individuals or groups who earn significantly less than the average income level in their society.

Price Ceilings

Government-imposed limits on how high a price can be charged for a product or service.

Equilibrium Price

The price at which the quantity of a good demanded by consumers matches the quantity supplied by producers, resulting in market stability.