United States, Canada, and Mexico are part of a free trade area that is now known as " USCMA". Which of the following statements is true? All USCMA member countries should use the exact same trade policy against non-USCMA member countries United States, Mexico, and Canada should not impose any tariff rates against German cars despite the fact that Germany is not part of USCMA United States, Mexico, and Canada should impose exactly the same tariff rates against German cars since United States, Mexico, and Canada are part of USCMA United States can impose a 20% tariff on German Cars, while Mexico can impose a tarif of 10% on the same German cars, and Canada can impose a 5% tariff on the same German cars

United States, Canada, and Mexico are part of a free trade area that is now known as " USCMA". Which of the following statements is true? All USCMA member countries should use the exact same trade policy against non-USCMA member countries United States, Mexico, and Canada should not impose any tariff rates against German cars despite the fact that Germany is not part of USCMA United States, Mexico, and Canada should impose exactly the same tariff rates against German cars since United States, Mexico, and Canada are part of USCMA United States can impose a 20% tariff on German Cars, while Mexico can impose a tarif of 10% on the same German cars, and Canada can impose a 5% tariff on the same German cars

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter28: International Trade And Finance

Section: Chapter Questions

Problem 18SQ

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Suppose there are three countries, the EU, Mexico, and Asia, in the world and the EU imports electronics from either Mexico or Asia (or both). Assume that Mexico is a small supplier and Asia is a large supplier and the free-trade prices of electronics from Mexico and Asia are PMEXICO=$1,200 and PASIA=$1,000, respectively, and the EU initially imposes a 15% tariff on both Mexico and Asia. Now the EU forms an FTA with Mexico. Use a graph of import demand and export supply curves to show the impact of this FTA on EU’s consumer surplus, government revenue, and welfare. Is the EU better off or worse off with the FTA? In the above graph, identify the effect of the FTA on Mexico’s producer surplus. Suppose after the FTA with the EU, Mexico invests in its electronics industry and lowers its marginal cost such that its free-trade price is PMEXICO=$1,100. How would the graph and the answer in parts (a) and (b) change?
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