Question

Work this travel problem based on the data provided in the table. Choose the correct answers.

Article Duty Levied in Percent of Its Cost
Automobiles, new and used 6 1/2
Cameras 15
Chinaware 35
Dresses 21
Jewelry, gold, platinum, or silver 24
Lace, shawls, and scarves 42 1/2
Luggage and handbags 20
Pearls, strung 55
Shirts 25
Sweaters, including Cashmere 20
Toys, mechanical 44
Watches, 18 jewels and over 10.75
You are returning to the United States from a trip to Europe. You purchased the following items:

2 scarves at $50 each (use your $100 exemption for this one).
silver jewelry for $175
chinaware for $200

How much duty must you pay? $ .

Overall, what percentage of the cost of these articles do you pay in duty? %

If you later find that you have gotten the same goods in the United States for a 20% markup; would you have saved more by buying them in the United States rather than in Europe (ignoring cost of travel)?

Answer 1

the duty must you pay is = $11.25

the percentage of the cost of all these articles you pay in duty is = 23.9%

if you later find that you could have gotten the same goods in the United States for a 30% markup; you would have saved more by buying them in

= Latin America (ignoring cost of travel).

Answer 2

1. You pay a total duty of $112
2. This is 23.6% of their total cost
3. You would save more by buying in the US

Explanation:

1. Since the scarves are claimed as exempt, the total duty is ...

... $175 × 24% + 200 × 35% = $42 +70 = $112

2. The total cost of goods imported is ...

... 2×$50 +175 +200 = $475

so the percentage of duty is ...

... $112/$475 × 100% ≈ 0.235789... × 100% ≈ 23.6%

3. A duty of 23.6% is more than a markup of 20%, so the markup represents less cost. Buying in the US would save money.