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Laptop computers are produced domestically and imported. The price of laptop computers is $1000 and domestic producers use $600 of imported inputs per laptop computer produced. What is the rate of effective protection if a 20% tariff is imposed on imports of laptop computers? Assume the nation is small.
As in Question 6, the price of laptop computers is $1,000 in a small nation, and laptops are both produced domestically and imported. If domestic producers use $600 worth of imported inputs, what is the effective rate of protection if a 20% tax is imposed on imported inputs?
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