Question

Which of the following best explains why a country might impose tariffs on imported goods?

• A. To increase the volume of imports and promote free trade
• B. To protect domestic industries from foreign competition
• C. To reduce the country’s export revenue
• D. To eliminate the trade deficit completely

Hint:

Remember: Tariffs are a trade barrier used to shield domestic industries from cheaper foreign goods, but they may lead to higher prices for consumers.

Answer 1

The Correct Option is B

To solve the problem, we need to understand the primary reasons why a country imposes tariffs on imported goods.

1. Understanding the Concepts:

- Tariffs: Taxes imposed on imported goods to increase their cost.
- Purpose of Tariffs: Usually imposed to protect domestic industries by making imported goods more expensive and less competitive.
- Effect of Tariffs: Helps domestic producers compete with foreign producers, and can also generate revenue for the government.

2. Analyzing the Options:

- Option A: Increasing imports and promoting free trade is contrary to imposing tariffs.
- Option B: Protecting domestic industries from foreign competition is a primary reason for tariffs.
- Option C: Reducing export revenue is not related to tariffs on imports.
- Option D: Eliminating trade deficit completely is not always possible or the main reason for tariffs.

Final Answer:

The best explanation is option B: To protect domestic industries from foreign competition.