In a given country, automobiles industry sells a car for 20,000$ that has a cost in imported parts of 15,000$. To encourage domestic automobile industry, the country puts 20% tariff on imported cars. Also, the government is looking for revenues, thus the government impose a tariff of 10% on imported parts. What the rate of Effective Protection? What the rate of tariff that the government should impose to double the rate of effective protection?

In a given country, automobiles industry sells a car for 20,000$ that has a cost in imported parts of 15,000$. To encourage domestic automobile industry, the country puts 20% tariff on imported cars. Also, the government is looking for revenues, thus the government impose a tariff of 10% on imported parts. What the rate of Effective Protection? What the rate of tariff that the government should impose to double the rate of effective protection?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: Application: International Trade

Section: Chapter Questions

Problem 9PA

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