A government increases import duties on foreign products. What is the most direct effect on a domestic importer?
Correct answer: A. Its imported goods may become more expensive
- A. Its imported goods may become more expensive
- B. Its employees automatically receive higher wages
- C. Its domestic competitors must leave the market
- D. Its customer demand becomes perfectly inelastic
Explanation
Import duties raise the cost of bringing foreign goods into the country, which may reduce the importer's profit or force it to raise prices. The other effects do not follow automatically from an import duty.
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About The Business Environment
Business environment includes the internal factors and external forces that affect business decisions, performance and survival. It covers customers, competitors, suppliers, government, technology, economic conditions, society, law and ecology, including the distinction between the microenvironment and the wider PESTLE environment.
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