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Suppose that the world price of automobiles is $20,000 and automobile manufacturers in country A use $10,000 worth of imported inputs and no domestic inputs. What is the effective rate of protection for the automobile industry in country A, if there is a tariff of 25 percent on imported automobiles and a tariff of 50 percent on imported inputs used in this industry?

Microeconomics, Economics

  • Category:- Microeconomics
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