Question

Widget Corp., a manufacturing firm in Lithuania, exports its manufactured tools to Wales. To protect its domestic firms, the Government of Wales imposes a 20 percent tax on the tools imported from Widget Corp. Therefore, Widget Corp. is subject to:A. ​formal institutional frameworks erected by the host-country government.B. ​formal institutional frameworks erected by the home-country government. ​C. informal rules of the game erected by the host-country government. ​D. informal rules of the game erected by the home-country government.

Answer 1

Answer:

A) formal institutional frameworks erected by the host-country government.

Explanation:

In this case, Wales is considered the host country since Widget Corp.'s home country is Lithuania. Taxes imposed by governments are institutional frameworks, they are not informal rules of the game.

The taxes imposed by Wales are called import tariffs and they are used to increase the price of imported goods and services.