Question

Your favorite Swiss chocolate costs the equivalent of $10 in Switzerland. You ask your local chocolate shop to order the chocolate for you. The shop owner tells you it will cost $20. He tells you the shipping is free and that he is making no profit from this sale. What is the MOST likely reason that the cost is double what it is in Switzerland?


There is a monopoly on the product because only one company makes chocolate.


There is a very low demand of that specific chocolate but a high supply.


There is a shortage of chocolate throughout the United States.


There is a tariff that must be paid on imported Swiss chocolate.

Answer 1

There is a tariff that must be paid on imported Swiss chocolate.

Explanation: a tariff (import tax) raises the importer’s cost per unit, so even with free shipping and no retail markup the shop must charge more to cover the duty. The other options would either lower price (low demand/high supply), or are less directly responsible given the owner’s statement (monopoly or a U.S. shortage are less likely to double the price in this scenario).