Assignment
1. Laptop computers are produced domestically and also imported. The price of laptop computers is $1000 and domestic producers use $600 of imported inputs per laptop computer produced at home.
a) What will be the price of laptop computers if a 20% tariff is imposed on imports of finished laptop computers?
b) What will be the domestic value added after tariff?
c) What will be the effective rate of protection?
d) What will be the cost of input if along with a 20% tariff on finished computers, a 20% tariff is also imposed on imported inputs?
e) What will be the value added when along with a 20% tariff on the finished computer, a 20% tariff is also imposed on imported inputs?
f) Based on information in part d) and e), what will be the new effective rate of protection on laptop computers?