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Assume ratio of the value of imported input to the value of the finished good is 0.81 and the nominal tariff rate on an imported
Assume ratio of the value of imported input to the value of the finished good is 0.81 and the nominal tariff rate on an imported final product is 0.22
- If gov't wants to achieve an effective rate of protection of 37% what will be the required nominal tariff rate on the imported input?
- If on the other hand, the gov't wants to achieve an effective rate of protection of 42% what will be the required nominal tariff rate on the imported input?
- Does your answer in a & b confirm that nominal tariff rate on the imported input yield higher effective rate of production? Explain your answer
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