China has had a growing interest in African countries. After talking to a lot of countries, China has taken steps to create a customs union with South Africa. The restricted FT Price is $15 and the tariff price $5. Draw a diagram explaining the relation and effects of this agreement. 5. Country A was trading with Country C, but now enters into a FTA with country B.

1. How does this impact volume of trade with Country B, Country C and overall volume of trade?

2. Illustrate the dynamics using a diagram

3. Find the net welfare effects for Country A. 

6. What effects does an import quota have on a large country?

Answer rating: 100% (QA)

Answer 1 FTA between Country A and Country B The impacts of this FTA on volume of trade between Country AB Country AC and the overall volume of trade is dependent on the specific terms of the FTA Gene... View the full answer