The world price of computers- What is the nominal rate

Subject: Economics    / General Economics
Question

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)