Q. 195.0( 2 Votes )

What would happen

Answer :

If Govt. of India puts a heavy tax on import of Chinese toys then:

1. Increase in the price of import: A heavy tax will increase the amount that the person who is importing has to pay. He shall pay much higher to import the toys.


2. Increase in market price: When import becomes expensive, the market price will also increase automatically. People will then prefer cheaper Indian toys.


3. Reduction in imports: When demand of Chinese toys goes down because of high price, imports will also automatically decrease. This would benefit Indian toy manufacturers.


Note:


Heavy tax is put deliberately by governments to reduce imports. If Indian government puts heavy tax, imports will decrease and this would give a chance to Indian manufacturers to increase production and sales.


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