Suppose That the Nominal Tariff Rate on Final Good X

Multiple Choice

Suppose that the nominal tariff rate on final good X is 8 percent and that the weighted average of the nominal tariff rates on the inputs used in producing good X is 12 percent. In this situation, the effective rate of protection (ERP) for final good industry X

A) must be greater than 12 percent.
B) must be between 8 percent and 12 percent.
C) must be less than 8 percent and greater than zero percent.
D) must be less than 8 percent and can be negative.