Find trade-diversion cost of the free-trade area, Microeconomics

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Find trade-diversion cost of the free-trade area

Country A and Country B create a free-trade area. Before the creation of the free-trade area, Country A imported 1 million TVs from the world market at a cost of $500 per TV and added a tariff of $30 per TV. It costs $110 to produce a similar TV in Country B.

a. Once the free-trade area is established, what will be the cost to Country A of the TVs diverted from Country B?
b. How much extra imports would have to be generated in Country A to offset the trade-diversion cost of the free-trade area?

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Microeconomics: Find trade-diversion cost of the free-trade area

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Microeconomics: Find trade-diversion cost of the free-trade area

Reference No:- TGS047706

Have a Question? (oR Write a Review)

Recent Questions Asked Microeconomics

Q : Calculate cindy''s deduction for home office

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Microeconomics: Find trade-diversion cost of the free-trade area

Reference No:- TGS047706

Recent Questions Asked Microeconomics

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