If the United States set a 12 percent tariff on imported automobiles, a car imported from Japan that costs the equivalent of $26,000 in Japan would be priced at _____ in the United States. (Disregard shipping costs.)

Question

a. $22,880
b. $31,200
c. $26,120
d. $29,120

Answer 1

To calculate the price of the car in the United States after applying the tariff, you need to add the tariff to the original price of the car.

1. Cost of car in Japan: $26,000
2. Tariff rate: 12%

Now, calculate the amount of the tariff:

$$\text{Tariff amount}=\text{Cost}\times \text{Tariff rate}=26,000\times 0.12=3,120$$

Next, add the tariff amount to the original cost:

$$\text{Price in the U.S.}=\text{Cost}+\text{Tariff amount}=26,000+3,120=29,120$$

Therefore, the price of the car in the United States would be $29,120.

The correct answer is: d. $29,120