Question Four While presenting the national budget recently, the Minister of Finance of Masamaki Republic announced that the Government has decided to protect its leather industry by imposing a 35% tariff on imported adult male leather footwear. The government has also decided to impose an 8% tariff on imports of leather and soles and all inputs required to produce leather footwear. The free trade price of a pair of adult leather footwear is Tsh. 150,000 (c.i.f. main port). It has also been estimated that the pre-tariff unit cost of leather footwear inputs is Tsh. 100,000. (a) Calculate the effective rate of protection on the leather footwear industry and comment on its size; (
Question Four While presenting the national budget recently, the Minister of Finance of Masamaki Republic announced that the Government has decided to protect its leather industry by imposing a 35% tariff on imported adult male leather footwear. The government has also decided to impose an 8% tariff on imports of leather and soles and all inputs required to produce leather footwear. The free trade price of a pair of adult leather footwear is Tsh. 150,000 (c.i.f. main port). It has also been estimated that the pre-tariff unit cost of leather footwear inputs is Tsh. 100,000. (a) Calculate the effective rate of protection on the leather footwear industry and comment on its size; (
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Question Four
While presenting the national budget recently, the Minister
of Finance of Masamaki Republic announced that the
Government has decided to protect its leather industry by
imposing a 35% tariff on imported adult male leather
footwear. The government has also decided to impose an
8% tariff on imports of leather and soles and all inputs
required to produce leather footwear. The free trade price of
a pair of adult leather footwear is Tsh. 150,000 (c.i.f. main
port). It has also been estimated that the pre-tariff unit cost
of leather footwear inputs is Tsh. 100,000.
(a) Calculate the effective rate of protection on the leather
footwear industry and comment on its size; (
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