The table below shows the prices in Canada of one kilogram of cheddar cheese produced in three different countries.Assume that all cheddar cheese is identical. $$\begin{array} { | l | c | c | }
\hline \text { Producing Country } & \text { Canadian Price in } \$ & \text { C anadian Price in } \$ \
\hline & \text { Free Trade } & 40 \% \text { Import Tariff } \
\hline \text { Canada } & 10.00 & \
\hline \text { United Kingdom } & 9.00 & \
\hline \text { United States } & 8.00 & \
\hline
\end{array}$$ TABLE 34- 1
-Refer to Table 34- 1.Suppose Canada and the United Kingdom negotiate a free- trade agreement in cheese.But Canada has a 40% tariff on cheese imported from other countries.From which country will Canada now buy its cheese?

Question

The table below shows the prices in Canada of one kilogram of cheddar cheese produced in three different countries.Assume that all cheddar cheese is identical. $$\begin{array} { | l | c | c | } 
\hline \text { Producing Country } & \text { Canadian Price in } \$ & \text { C anadian Price in } \$ \
\hline & \text { Free Trade } & 40 \% \text { Import Tariff } \
\hline \text { Canada } & 10.00 & \
\hline \text { United Kingdom } & 9.00 & \
\hline \text { United States } & 8.00 & \
\hline
\end{array}$$ TABLE 34- 1
-Refer to Table 34- 1.Suppose Canada and the United Kingdom negotiate a free- trade agreement in cheese.But Canada has a 40% tariff on cheese imported from other countries.From which country will Canada now buy its cheese?

Quizplus · Accepted Answer

With a free-trade agreement, the price of cheese from the United Kingdom remains at $9.00, which is cheaper than the Canadian price of $10.00 and the United States price with a 40% tariff ($8.00 + 40% = $11.20). Thus, Canada will buy all its cheese from the United Kingdom.

The Table Below Shows the Prices in Canada of One