[Answered] Suppose a good is produced in a country from a combination of foreign parts and domestic inputs. If the good

Suppose a good is produced in a country from a combination of foreign parts and domestic inputs. If the good sells for $600 but requires $200 of imported parts. The domestic value added is $ Assuming the country cannot change the world price, a 10% tariff on the good will cause the domestic price to rise to $ and cause the domestic value added to become $ . In this case, the effective rate of protection is %. If, in addition to the 10% tariff on the final good, a 10% tariff on imported parts is levied, the effective rate of protection for domestic manufacturers becomes %.

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