Question Four While presenting the national budget recently, the Minister of Finance of Masamaki Republic announced that the Government has decided to protect its leather industry by imposing a 35% tariff on imported adult male leather footwear. The government has also decided to impose an 8% tariff on imports of leather and soles and all inputs required to produce leather footwear. The free trade price of a pair of adult leather footwear is Tsh. 150,000 (c.i.f. main port). It has also been estimated that the pre-tariff unit cost of leather footwear inputs is Tsh. 100,000. (a) Calculate the effective rate of protection on the leather footwear industry and comment on its size; (
Question Four While presenting the national budget recently, the Minister of Finance of Masamaki Republic announced that the Government has decided to protect its leather industry by imposing a 35% tariff on imported adult male leather footwear. The government has also decided to impose an 8% tariff on imports of leather and soles and all inputs required to produce leather footwear. The free trade price of a pair of adult leather footwear is Tsh. 150,000 (c.i.f. main port). It has also been estimated that the pre-tariff unit cost of leather footwear inputs is Tsh. 100,000. (a) Calculate the effective rate of protection on the leather footwear industry and comment on its size; (
Chapter17: International Trade
Section: Chapter Questions
Problem 2.5P
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