Suppose the nominal tariff rate on rice crackers is 0.15 (15%), and the tariff on rice (the ingredient used to make rice crackers) is 0.1 (10%). The ratio of the value of rice to the value of rice cracker is 0.9. What is the effective protection rate for rice crackers?
Use a diagram to show how import tariff on steel can hurt the competitiveness of U.S. car industry by raising its cost, reducing its output, and raising the price of vehicles.
Your friend, Ivan, has decided to move his factory to Thailand, for the wage rate is lower there. Ivan maintains that lower wages in Thailand will definitely help to lower production cost. Do you agree or disagree? Why or why not? Explain.
Are policies more biased to free trade or protectionism? Why?