Which scenario best describes the operation of a tariff on imports?

• A. A government sets a quota limiting the total quantity of a good that can be imported.
• B. A government bans the importation of certain goods from foreign countries.
• C. A government provides subsidies to domestic producers to lower the price of locally made goods.
• D. A government imposes a tax on goods brought into the country, increasing their price for domestic consumers.

Answer: (D)

Verified step by step guidance

1. Understand the definition of a tariff: A tariff is a tax imposed by a government on goods imported into the country, which raises the cost of these goods for domestic consumers.
2. Identify the key characteristic of a tariff: It directly increases the price of imported goods rather than limiting quantity or banning imports.
3. Compare the given scenarios: Recognize that a quota limits the quantity of imports, a ban prohibits imports entirely, and subsidies lower domestic prices, none of which are tariffs.
4. Focus on the scenario where a tax is applied to imports, causing an increase in their price, which aligns with the definition of a tariff.
5. Conclude that the correct description of a tariff is the government imposing a tax on imported goods, thereby increasing their price for domestic consumers.