Question

    A country imposes a 10% tariff on imported vehicles but

    no tariff on imports of machinery or other inputs to the manufacture of vehicles. Suppose that under free trade, the cost of imported material is $4000 for a $10000 vehicle. Calculate the effective rate of protection.
    A 15% Correct Answer Incorrect Answer
    B 16% Correct Answer Incorrect Answer
    C 20% Correct Answer Incorrect Answer
    D 10% Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

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