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.

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter28: International Trade
Section: Chapter Questions
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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.
The effective rate of protection if only the tariff on steel is imposed=D0.25.
Transcribed Image Text: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. The effective rate of protection if only the tariff on steel is imposed=D0.25.
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