The following information is relevant to an import-competing steel industry.

(1) Iron ore and coal are the only intermediate inputs in steel production, and bothare either imported or are produced domestically in competition with imports; (2)Production of 1 tonne of steel requires 4 tonnes of iron ore and 6 tonnes of coal; (3)The free trade price of steel is $600 per tonne, for coal is $40 per tonne,for iron ore is $70per tonne.(4)The country imposes a 30 per centad valoremtariff on imports of steel,while iron ore and coal imports facead valoremtariffs of 30 per cent and 15 per cent respectively.

(a)Calculate the effective rate of protection (ERP) for the steel industry.

(b)What happens to the ERP for the steel industry if the tariff on iron ore is increased to 40 per cent and on coal is reduced to 10 per cent?

(c)What happens to the ERP if the tariffs on iron ore and coal are both abolished but country increases tariff on steel imports to 50 per cent?