The effective rate of protection of a tariff is important to producers because it indicates how much the domestic import-competing producer of the good can increase the value added portion of their final product.

Question

Quizplus · Accepted Answer

The effective rate of protection measures the impact of a tariff on the value added by domestic producers. It tells the domestic producers how much more value-added they can create by producing the good domestically than by importing it. Therefore, the statement is true.

The Effective Rate of Protection of a Tariff Is Important