Suppose that the production of $1 million worth of steel in Canada requires $100,000 worth of taconite. Canada's nominal tariff rates of importing these goods are 20% for steel and 10% for taconite....

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Suppose that the production of $1 million worth of steel in Canada requires $100,000 worth of taconite. Canada's nominal tariff rates of importing these goods are 20% for steel and 10% for taconite. Given this information, calculate the effective rate of protection for Canada's steel industry.

Answered Same DayDec 25, 2021

Answer To: Suppose that the production of $1 million worth of steel in Canada requires $100,000 worth of...

David answered on Dec 25 2021

119 Votes

Tariff rate imposed on steel = 20%
Tariff rate for taconite = 10%
However, taconite forms 10% of the steel cost as for producing $ 1 million worth of steel, $
0.1 million taconite is required.
Thus, effective protection rate to the Canadian Steel Industry = 20% + (10% of 10%) = 20%
+ 1% =...

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Suppose that the production of $1 million worth of steel in Canada requires $100,000 worth of taconite. Canada's nominal tariff rates of importing these goods are 20% for steel and 10% for taconite....

Answer To: Suppose that the production of $1 million worth of steel in Canada requires $100,000 worth of...

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