A Tariff Rate quota: Has a lower tariff rate on goods shipped below the quota and...

A Tariff Rate quota:

Has a lower tariff rate on goods shipped below the quota and a higher rate on goods shipped once they exceed the quota

Charges a tariff on natural resources

Sets a quota on natural resources

Sets a quota on natural resource and a tariff on manufactured goods

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Expert Solution

A) A Tariff Rate quota (TRQ) Has a lower tariff rate on goods shipped below the quota and a higher rate on goods shipped once they exceeded the quota.

Explanation: A tariff rate quota is an import policy which is used to regulate them. Tariff rate quota has a low tariff applied on the shipment of the goods below a certain threshold quantity whereas a comparatively higher amount of tariff is applied on the imports of good exceeding the specified quota. We can understand it by an example:

Lets's say that the import quota is 5000 units and tariff rate quota of 20% is applied on quantities shipped below this limit. Whereas 35% TRQ is applied on quantities shipped above the limit of 5000 units.

We are shipping 3000 units of furniture, this value of furniture units is certainly below the quota limit hence the tariff rate quota applied will be 20%.

If we are shipping 6000 units of furniture then the tariff rate quota applied will be 35%.

Rahul Sunny answered 1 year ago

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