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What is the nominal rate of protection

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Reference no: EM131432018

1. You are given the following information:

  • The world price of computers is $10,000
  • The value of imported components is $1,000
  • Tariff on imported computers is 20%.

(a) What is the nominal rate of protection? ($500)

(b) What is the effective rate of protection? ($500)

Now along with a tariff on imported computers of 20%, suppose that a 30% tariff is placed on the imported components used to make computers.

(c) What is the new nominal rate of protection? ($500)

(d) What is the new effective rate of protection? ($500)

Reference no: EM131432018

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