Which of the following is the most likely method a nation would use to limit the importation of inexpensive cars?

• A. Subsidizing domestic car manufacturers
• B. Imposing a tariff on imported cars
• C. Increasing export quotas for domestic cars
• D. Reducing taxes on imported cars

Answer: (B)

Verified step by step guidance

1. Understand the goal: The nation wants to limit the importation of inexpensive cars, which means reducing the quantity of these cars entering the domestic market.
2. Review each option's effect on imports: Subsidizing domestic car manufacturers lowers their costs but does not directly restrict imports; it makes domestic cars more competitive but doesn't limit imports directly.
3. Consider tariffs: Imposing a tariff on imported cars increases their price, making them less attractive to consumers and effectively reducing the quantity imported.
4. Analyze export quotas: Increasing export quotas for domestic cars affects how many cars the nation sells abroad, not how many it imports, so it does not limit imports.
5. Evaluate tax reductions on imports: Reducing taxes on imported cars would lower their price, encouraging more imports, which is the opposite of limiting imports.