Use the concept of effective rate of protection to evaluate the protection given to the auto industry
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Question:
Use the concept of effective rate of protection to evaluate the protection given to the auto industry in Tralfamadore. There is a 25% tariff on autos imported into Tralfamadore, and a 10% tariff on intermediate inputs into auto production. All intermediates in auto production are imported. The world price of an auto is $20,000 and the value at world prices of intermediate inputs into auto production is $10,000.
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