Answer below Question

Question 01: Assume the following: world price of automobiles under free trade is $10,000 and domestic producers use $5000 worth of imported inputs.

a. What rate of effective protection would be provided to the domestic auto industry by a 25% tariff on imported autos and no tariff on inputs? Explain.

b. What rate of effective protection would be provided by a 25% tariff on imported autos and a 25% tariff on inputs? Explain.

c. Interpret the results of (a) and (b)

Question 02: Evaluate this statement : If a tariff is imposed to reduce imports, the balance of trade will surely improve since it is safe to assume that exports will be unaffected by the tariff.

Question 03: Why might we expect intra-industry trade based on scale economies to be less politically controversial than inter-industry trade based on comparative advantage?

Question 04: Developing countries often grant tax concessions to multinational firms in an effort to attract capital flows. explain the effects of this policy