A tax of 20 cents per unit of imported cheese would be an example of: Compound tariff Effective tariff Ad valorem tariff Specific tariff
Question
A tax of 20 cents per unit of imported cheese would be an example of:
- Compound tariff
- Effective tariff
- Ad valorem tariff
- Specific tariff
Solution
Step 1: Break Down the Problem
We need to identify the type of tax based on the provided options, which include different forms of tariffs imposed on imported goods.
Step 2: Relevant Concepts
- Specific Tariff: This is a fixed fee based on the quantity of the product, such as a certain amount per unit (e.g., cents per cheese unit).
- Ad Valorem Tariff: This is a percentage of the value of the imported goods.
- Compound Tariff: This is a combination of both specific and ad valorem tariffs.
- Effective Tariff: This is the overall rate of a duty that actually applies after exemptions and other adjustments.
Step 3: Analysis and Detail
Since the problem specifies a tax of 20 cents per unit of cheese, it matches the definition of a specific tariff, which charges a fixed amount regardless of the price of the cheese.
Step 4: Verify and Summarize
Based on the definitions, the tax given (20 cents per unit) indeed corresponds to the nature of a specific tariff as it is a unit-based charge rather than a value-based one.
Final Answer
The answer is: Specific tariff.
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