Reference no: EM1310478

Q. A shoe factory in western Maine manufactures sneakers from two products: cloth also rubber. Cloth accounts for 40% of the value of a finished sneaker, while rubber accounts for 60% of the finished value. The firm currently imports rubber from Ghana also obtains the cloth from a textile mill in North Carolina. The United States government imposes a 5% ad valorem import tariff on rubber also a 10% ad valorem import tariff on cloth. The United States also imposes a 15% tariff on imported sneakers.

Illustrate what is the effective rate of protection for sneakers?