What is products price after the imposition of the tariff

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Reference no: EM131076424

Suppose the free trade price of a domestic product that faces foreign competition is $10,000 and contains 25% imported components. Assuming this is a small country, consider the following situations:

A 10% tariff is placed on the (final) product but not on the imported components;

i) What is the product's price after the imposition of the tariff?

ii) What is the domestic value added before and after the imposition of the tariff?

iii) Calculate the effective rate of protection

Reference no: EM131076424

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