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Chapter 20: Q. 48 (page 491)

Why might a tax on domestic consumption of resources critical for national security be a more efficient approach than barriers to imports?

Short Answer

Expert verified

A tax on domestic consumption of resources critical for national security is a more efficient approach than barriers to imports because it preserves the availability of resources.

Step by step solution

01

Step 1. Meaning of tax.

A mandatory fee or financial charge levied by any government on an individual or an organization to collect revenue from the public is called a tax. It is levied to provide the best facilities and infrastructre.

02

Step 2. Reason for domestic consumption an efficient approach.

A tax on domestic consumption of resources critical for national security is a more efficient approach than barriers to imports because it preserves the availability of resources. The tax protects inefficient and excessive use of resources and the country can operate at efficient levels.

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