1.
a) What is the difference between a nominal tariff and an effective tariff? What is the usefulness of the concept of effective protection?
b) Calculate the rate of effective protection, g, when t, nominal tariff on the final good, is 40 percent and the nominal tariff on Imported input is.
i) 20 percent
ii) 40 percent
iii) 60 percent
c. What general conclusion can you reach about the relationship between g and t?
2.
| Price of TV set |
Quantitiy Demand |
Quantitiy Supplied |
|
$ 500
|
100 |
800
|
|
400
|
300 |
600
|
|
300
|
500
|
400
|
|
200
|
700
|
|
200
|
|
100
|
900
|
|
Suppose that instead of a quota, Australia grants its import competing producers a production subsidy of $50 per TV set