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(2} The world price of a bottle is P100. To produce a bottle in Utonia, one needs imported inputs worth F60. The government imposes a

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(2} The world price of a bottle is P100. To produce a bottle in Utonia, one needs imported inputs worth F60. The government imposes a tariff on bottles of t5- = 0.50 (the nominal rate of protection, NRP, of bottles}. Hence, an imported bottle would cost P150. It also imposes a tariff on inputs of t; = 0.2 5. Hence, the imported inputs would cost P75. {a} Before the tariffs are imposed, how much is the domestic value added of a bottle produced in Utonia? {b} After the tariffs are imposed, how much is the domestic value added of a bottle produced in Utonia'? {c} How much is the effective rate of protection (ERP) enjoyed by Utonian bottle producers? {d} If we keep the tariff on bottles constant at n; = 0.50, how much should the tariff on imported inputs t; be so that ERP = NRP'? (e) If we keep the tariff on bottles constant at 5- = 0.50, how much should the tariff on imported inputs t; be so that E RP at: 0

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