If no imported inputs (hard-disk drive) go into the domestic production of a final product (desktop computer) then the ?
Correct answer: A. nominal tariff rate on the final product equals the effective tariff rate on the product
- A. nominal tariff rate on the final product equals the effective tariff rate on the product
- B. nominal tariff rate on the final product is greater than the effective rate on the product
- C. nominal tariff rate on the final product is less than the effective tariff rate on the final product
- D. None of the above
Explanation
The effective rate of protection measures protection of domestic value added. If the final product uses no imported inputs, its value-added base is the whole product, so the effective and nominal tariff rates are equal.
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