DECA Marketing Cluster Practice Exam

What outcome does a tariff have on a particular class of imports or exports?

1. It decreases the price of imported goods

2. It restricts the availability of products

3. It establishes a tax on those goods

4. It enhances competition among domestic products

The correct answer is: It establishes a tax on those goods

A tariff is essentially a tax imposed by a government on imported goods. This tax is applied at the point of entry into a country and is typically aimed at increasing the cost of foreign products, making them less competitive compared to domestic products. By establishing a tax on imported goods, tariffs can influence consumer behavior, potentially leading to increased demand for locally produced items as consumers may find them more affordable in comparison. While tariffs can lead to a restriction in the availability of certain imported products, that effect stems from the increase in cost and potentially reduced demand because of higher prices. Similarly, while tariffs often aim to enhance competition among domestic products, this is an indirect result of the pricing changes influenced by the tax, rather than the primary function of the tariff itself. Overall, the defining feature of tariffs is their role as a form of taxation on goods crossing borders, which is why establishing a tax on those goods is the correct outcome associated with tariffs.