Tariffs on imported manufactured goods

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Senior Manager

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Re: Tariffs on imported manufactured goods [#permalink]

18 Jan 2013, 23:06

heavy tariff on imported goods to Country Y is cost...
manufacture in Country Y will increase profit...

(B) is irrelevant to the profit increase...
(D) attempts to reverse the situation... tariff on Country Y for imported goods is another story...

To increase profits: decrease cost, increase market/sales
(E) and (C) seem to be relevant to increase in profits BUT Labor Cost will need us to assume more than what is given...

(C) on the other hand, is about having a market which is a basic requirement to making sales...
If there is no market, how can profit increase?

Answer: C

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Re: Tariffs on imported manufactured goods [#permalink]

17 Feb 2013, 22:21

nifoui wrote:

Here is a 700-800 level question from MGMAT:

Country X imposes heavy tariffs on imported manufactured goods. Company Y has determined that it could increase its profits in the long term by opening a factory in Country X to manufacture the goods that it currently produces in its home country for sale in Country X.

For Company Y's determination to be true, which of the following assumptions must also be true?
A: Company Y will be able to obtain all the necessary permits to open a factory in Country X.
B: Company Y currently produces no goods outside its home country.
C: A sustainable market for Company Y's goods currently exists in Country X.
D: Company Y's home country does not impose tariffs on imported goods.
E: Labor costs in Country X are lower than those in Company Y's home country.

Overhead cost for Coun Y is "Heavy tariffs" => Coun Y decides to open the factory in CounX to avoid tariffs

C:COULD increase profit in long term.

GAP:There is demand for the goods by Coun Y.
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Re: Tariffs on imported manufactured goods [#permalink]

10 Mar 2013, 11:52

can someone please explain if we can consider something, which already exists in the premise, as assumption....Here in this case we already know that the market for the goods exist from the very fact that the country Y intends to shift the manufacturing facility to country X for products it has already been producing in country Y and selling in country X

Re: Tariffs on imported manufactured goods [#permalink] 10 Mar 2013, 11:52

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