Problem 1. 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?
Problem 2. European Common Market
a. Who was involved in the early efforts to create the European Common Market (ECC) and what were some of the early measures taken by the ECC?
b. How did the adoption of the euro in the ECC come about?
Problem 3. CEMEX
a. What are the specific advantages of CEMEX that has allowed it to succeed internationally?
b. What did CEMEX do to use its advantages to improve its position internationally?
Problem 4. Japan has a very low rate of immigration because of very restrictive government policies. What arguments could you make to convince the Japanese government that those policies restrict the economic growth of Japan?
Reference:
Pugel, T.A. (2009). International economics (14th ed.). New York, NY: McGraw-Hill.