U.S. firms can produce and sell electric fans for $25. The United States can also import electric fans from China at $40 each and from Canada at $45 each. Electric fans made in the United States, China, and Canada are identical. Currently, the United States imposes a 30% tariff on imported electric fans. For the United States, are there trade diversion losses, trade creation gains, or both as a result of the formation of NAFTA?

a. There are only trade diversions losses
b. There are only trade creation gains.
c. There are neither trade creation gains nor trade diversion losses.
d. There are both trade creation gains and trade diversion losses.


Ans: b. There are only trade creation gains.

Economics

You might also like to view...

In the case of automobile and medical insurance, adverse selection might mean that as the cost of insurance rises, the good drivers and healthy people reduce their coverage, while the poor drivers and unhealthy people maintain their coverage

a. True b. False Indicate whether the statement is true or false

Economics

What will increase long-run aggregate supply?

What will be an ideal response?

Economics

Professor Cowen's objection to fiscal policy spending by government is:

A. the government may rush to start stimulus spending and not spend money in the most effective way possible. B. the government may put too much thought into the spending projects and confuse stimulus spending with industrial policy. C. households and businesses might realize that the boost in spending is from the government and simply save the income they receive. D. the government may not have enough money available to do an appropriate amount of spending.

Economics

The slope of the ________ is -MPL/MPK.

A. isoquant B. isocost line C. total utility curve D. marginal utility curve

Economics