Question

Winners and losers from tariff reductions Suppose that Canada imports pearl necklaces from India. The free market price is $80.00 per necklace. If the tariff on imports in Canada is initially 8%, Canadians pay $________ per necklace. One of the accomplishments of the Uruguay Round that took place between 1986 and 1993 was significant across-the-board tariff cuts for industrial countries, as well as many developing countries. Suppose that as a result of the Uruguay Round, Canada reduces its import tariffs to 4%. Assuming the price of pearl necklaces is still $______ per necklace, consumers now pay the price of per necklace. in Canada_______ and Based on the calculations and the scenarios presented, the Uruguay Round most likely in India

Answer 1

Answer:

a. $86.40 per necklace

b. $86.40 per necklace

c. $83.20 per necklace

Explanation:

free market price pf necklace is $80.00

Initial tariff on import = 8%

8% of $80.000 = 0.08 x $80.00 = $6.40

Canadians will therefore pay $80.00 + $6.40 = $86.40 per necklace

If tariff is reduced to 4%,

4% of $80.00 = 0.04 x $80.00 = $3.20

new price per necklace = $80.00 + $3.20 = $83.20 per necklace