Suppode that Japan levies a 40% on pickup trucks and a 20% on engines. The effective rate of protection on pickup trucks: Answer: less than the nominal rate of protection on pick-up trucks. Why is that?

Suppode that Japan levies a 40% on pickup trucks and a 20% on engines. The effective rate of protection on pickup trucks: Answer: less than the nominal rate of protection on pick-up trucks. Why is that?

Microeconomics

13th Edition

ISBN:9781337617406

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter6: Elasticity

Section6.4: The Relationship Between Taxes And Elasticity

Problem 4ST

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Suppode that Japan levies a 40% on pickup trucks and a 20% on engines. The effective rate of protection on pickup trucks:

Answer: less than the nominal rate of protection on pick-up trucks.

Why is that?

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