Explain in what the meaning of the effective rate of protection is. Is it possible for the effective rate of protection to be negative or positive? What does it mean if it is negative or positive? b) Suppose that in the production of car mirrors, the home is the import-competing industry in the country. And let's assume for simplicity that a single imported input is used to produce car mirrors, and this is black paint. Transportation expenses etc. are zero. In the first case, the unit price of the car mirror is 50 units, and 10 units of that are paid for black paint. Suppose the government imposes a 50% tariff on imports of car mirrors. What is the effective rate of protection of this 50% tariff application provided to the manufacturers of the import-competing car mirror industry?
Explain in what the meaning of the effective rate of protection is. Is it possible for the effective rate of protection to be negative or positive? What does it mean if it is negative or positive?
b) Suppose that in the production of car mirrors, the home is the import-competing industry in the country. And let's assume for simplicity that a single imported input is used to produce car mirrors, and this is black paint. Transportation expenses etc. are zero. In the first case, the unit price of the car mirror is 50 units, and 10 units of that are paid for black paint. Suppose the government imposes a 50% tariff on imports of car mirrors. What is the effective rate of protection of this 50% tariff application provided to the manufacturers of the import-competing car mirror industry?
Step by step
Solved in 2 steps with 3 images
