The world price of computers- What is the nominal rate
The world price of computers- What is the nominal rate
Subject: Economics   / General Economics
Question
1. You are given the following information:
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•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)