b) What effect does a tariff have on gross profit if the company does not...

Question

Question

b) What effect does a tariff have on gross profit if the company does not raise selling prices in response to the tariff?

c) What if the company raises selling prices to the full tariff along to the customer (how will it impact gross profit)?

Answer 1

Answer #1

Ans.b) Below is the effect a tariff have on gross profit if the company does not raise selling prices in response to the tariff-

Its Gross profit will be lower by the amount of tarrif.

Ans.c) If the company raises selling prices to the full tariff along to the customer it will impact gross profit in following manner-

Its Gross profit will have no effect.

Answer 2

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