A small country’s protectionism can be summarized: The typical tariff rate is 50 percent, the (absolute value of the)

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QUESTION:

A small country’s protectionism can be summarized: The typical tariff rate is 50 percent, the (absolute value of the) price elasticity of demand for imports is 1, imports would be 20 percent of the country’s GDP with free trade, and the protected industries represent 15 percent of GDP Using our triangle analysis, what is the approximate magnitude of the economic costs of the tariff protection, as a percentage of the country’s GDP? As a percentage of the gain of producer surplus in the protected sectors?


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