Information for questions 10-12 The world is made of three c…

Questions

Infоrmаtiоn fоr questions 10-12 The world is mаde of three countries, A, B, аnd C. There are no transportation costs among these countries, just (possibly) tariffs. Countries A and B are considering forming a Regional Trade Agreement (RTA). If they do so, then they will have no tariffs against each other’s goods, but will keep their tariffs against country C’s goods. The following table lists the costs of production per unit of steel in the three countries, and also the tariffs that A imposes on steel from country B and C before the RTA is formed.   Cost of production ($/unit of steel produced) A’s tariff ($/unit of steel imported) Country A 21   Country B 15 5 Country C 11 5 After forming an RTA with country B, country A would import steel from:

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