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What is the effective rate of tariff protection

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Question - Use the following information to answer questions: Hewlett Packard (HP), an American company, produces pocket audio recorders and sells them for $350, the same price level of foreign competitors selling on the global market pre-tariff. In order to produce each recorder, HP needs to import electronic components worth $150 pre-tariff.

Suppose a tariff of 10% is imposed on imported pocket audio recorders, therefore HP can sell their recorders at a 10% higher price. What is the effective rate of tariff protection?

A. 35%

B. 40%

C. 20%

D. 17.5%

Reference no: EM133135480

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