Question

The world price of a liter of vodka is$7.00. While the distillation is done domestically, some of the grainsand materials for the bottle are imported. The value of imported components is$2.00. Assume that thereis no tariff on imported components used to make vodka.a) (1 points) What is the NRP for vodka if there is a tariff of$3.00

Answer 1

The NRP for vodka is 42.8%.

Step-by-step explanation:

Since the world price of a liter of vodka is $ 7.00, and while the distillation is done domestically, some of the grain and materials for the bottle are imported, and the value of imported components is $ 2.00, assuming that there is no tariff on imported components used to make vodka, to determine what is the NRP for vodka if there is a tariff of $ 3.00 the following calculation must be performed:

X = ((7 + 3) - 7) / 7

X = (10 - 7) / 7

X = 3/7

X = 0.428

Thus, the NRP for vodka is 42.8%.