India signed the WTO agreement in 1995. Suppose the average tariff on an imported electronic gadget was 30 % before WTO compliance, and after compliance it was reduced to 12 %. If the world price of the gadget is ₹20,000, calculate the amount saved per gadget for an Indian consumer after WTO compliance. Choose the correct answer.
Answer
₹3,600
The correct answer is ₹3,600 — Select the option that matches ₹3,600.
Step-by-step solution
- Find the pre‑WTO consumer price: 20,000 × (1 + 0.30) = ₹26,000.
- Find the post‑WTO consumer price: 20,000 × (1 + 0.12) = ₹22,400.
- Calculate the saving: 26,000 – 22,400 = ₹3,600.
- Select the option that matches ₹3,600.
Common mistake: Applying the percentage reduction to the already‑tariffed price instead of the world price, giving a smaller saving.
Concept tested: WTO impact on tariff rates
Published · How this solution was prepared and checked
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