A prohibitive tariff has

Question

a. only revenue effects.

b. only protective effects.

c. both protective and revenue effects.

d. neither protective nor revenue effects.

Answer 1

Hi

A "prohibitive tariff" is one so high that no one imports any of that item.

hence it is neither protective nor revenue effects

Answer 2

b. only protective effects.

http://internationalecon.com/Trade/Tch90...

If country produces certain goods which has prohibitive tariffs, then it works as "protective".

Revenues are zero in "prohibitive tariffs" case (thus imports for this good are zero).

Answer 3

b.

A prohibitive tariff means the tariff is so high that the item is not legally imported.  Therefore, no revenue is collected.  

Since imports are severely restricted, local industry is protected and can produce as inefficiently as it wants to and charge whatever it wants (much like the U.S. auto industry before Japaneses competition).