Suppose, to produce $200,000 worth of finished cloth in the US, textile producers import $150,000 of raw materials. The raw materials are imported duty free. However, the US has imposed a 5% nominal tariff

Suppose, to produce $200,000 worth of finished cloth in the US, textile producers import $150,000 of raw materials. The raw materials are imported duty free. However, the US has imposed a 5% nominal tariff on imports of finished cloth. What is the effective rate of protection enjoyed by the domestic cloth producers in the US?

A. 20%
B. 10%
C. 10%
D. 5%

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Suppose, to produce $200,000 worth of finished cloth in the US, textile producers import $150,000 of raw materials. The raw materials are imported duty free. However, the US has…

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