Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Suppose that th e nominaltariff rate on an imported final product is 0.15,while the ratio of the value of imported input to the value of
Suppose that thenominaltariff rate on an imported final product is 0.15,while the ratio of the value of imported input to the value of the finished product is 0.58, and the nominal tariff rate on the imported input is 0.023.
- calculate the effective rate of protection
- now assuming government increases the nominal tariff rate on the imported input to 0.07, calculate the new effective rate of protection.
- assuming you are the leadEconomistof aTrade Policy Teamthat seeks to bolster domestic production of the final good that uses the imported input in question, based on your answers in (i) and (ii), whichnominal tariff rate on the imported input will you suggest to your team.Briefly explain your answer.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started