If the domestic value added before an import tariff for a product is $500 and the domestic value added after the tariff is $550, the effective rate of protection is
A) 5 percent.
B) 8 percent.
C) 10 percent.
D) 15 percent.

Question

Quizplus · Accepted Answer

The effective rate of protection is calculated as the percentage increase in domestic value added due to the tariff. Here, it increased from $500 to $550, which is a $50 increase on the original $500. This is a 10% increase ($50/$500 * 100%).

If the Domestic Value Added Before an Import Tariff for a Product