Suppose That a Country Has a Nominal Tariff Rate of 10

question 15

Essay

Suppose that a country has a nominal tariff rate of 10 percent on good A and imports $100,000 of good A, has a nominal rate of 5 percent on good B and imports $120,000 of good B, has a nominal rate of 12 percent on good C and imports $80,000 worth of good C, and has a prohibitive tariff rate of 50 percent on good D. These are the only four goods in existence. Calculate the country's unweighted-average nominal rate and its weighted-average nominal rate. Explain in economic terms the relationship you have found between the unweighted- and weighted-average rates.

---

Definitions:

Grocery and Discount Stores

Retail establishments that primarily sell food products and everyday items, often at reduced prices.

Hybrid Cars

Vehicles powered by a combination of internal combustion engines and electric motors, aiming to reduce fuel consumption and emissions.

Early Adopter

A person who uses or purchases new products, technologies, or innovations early in their lifecycle, often before the majority of consumers.

Early Majority Stage

A stage in the product adoption lifecycle where a product begins to gain acceptance among a larger segment of the population, following the innovators and early adopters.