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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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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