The substitution effect occurs when a good becomes more expensive and people seek out alternative goods

Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars. Pacifica could be accused of

A) avoiding import quotas. B) increasing its gains from trade. C) dumping. D) engaging in learning-by-doing.

The effective rate of protection is a weighted average of nominal tariffs and tariffs on imported inputs

It has been noted that in most industrialized countries, the nominal tariffs on raw materials or intermediate components or products are lower than on final-stage products meant for final markets. Why would countries design their tariff structures in this manner? Who tends to be helped, and who is harmed by this cascading tariff structure?