Table 4.1.Production Costs and Prices of Imported and Domestic VCRs

-Consider Table 4.1.The effective tariff rate equals:
A) 11.1 percent
B) 16.7 percent
C) 50.0 percent
D) 100.0 percent

Question

Table 4.1.Production Costs and Prices of Imported and Domestic VCRs
 
-Consider Table 4.1.The effective tariff rate equals:
A) 11.1 percent 
B) 16.7 percent 
C) 50.0 percent 
D) 100.0 percent

Quizplus · Accepted Answer

The effective tariff rate is calculated based on the value added by the domestic industry and the nominal tariff rate on the final product. A 50% effective tariff rate suggests that the protection provided by the tariff is equivalent to half of the value added by domestic producers.

Table 41Production Costs and Prices of Imported and Domestic VCRs