To produce a car, you need steel as an intermediate good. If this country imports both cars and steel, a 25% tariff rate can be imposed on car imports, and a 10% tariff rate can be imposed on steel imports. The price of a car is $200 before the tariff, and the price of one unit of steel is $25. Knowing that two units of steel are required to produce one car: The effective rate of protection if only the tariff on steel is imposed=-0.033. The effective rate of protection if only the tariff on steel is imposed-0.3. The effective rate of protection if only the tariff on steel is imposed=0.333. O The effective rate of protection if only the tariff on steel is imposed=0.25.
To produce a car, you need steel as an intermediate good. If this country imports both cars and steel, a 25% tariff rate can be imposed on car imports, and a 10% tariff rate can be imposed on steel imports. The price of a car is $200 before the tariff, and the price of one unit of steel is $25. Knowing that two units of steel are required to produce one car: The effective rate of protection if only the tariff on steel is imposed=-0.033. The effective rate of protection if only the tariff on steel is imposed-0.3. The effective rate of protection if only the tariff on steel is imposed=0.333. O The effective rate of protection if only the tariff on steel is imposed=0.25.
Chapter28: International Trade
Section: Chapter Questions
Problem 10P
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