What is the effective rate of protection on the product

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Reference no: EM13160392

Suppose the production of a product requires two intermediate inputs - input A and input B. The tariff on the product is 12%, while the tariff on input A is 20% and input B is 50%.

a. Is the effective rate of protection of this product greater or less than 12%? Explain your answer.

b. If Inputs A and B are respectively 20% and 40% of the cost of producing this product, what is the effective rate of protection on the product?

Reference no: EM13160392

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