The diagram below shows the domestic demand and supply curves for denim jeans in Canada. The prevailing world price is P W . Assume that all jeans are identical.
FIGURE 34- 2
-The North American Free Trade Agreement (NAFTA)is guided by the principle of

Question

The diagram below shows the domestic demand and supply curves for denim jeans in Canada. The prevailing world price is P W . Assume that all jeans are identical.
  FIGURE 34- 2
-The North American Free Trade Agreement (NAFTA)is guided by the principle of

Quizplus · Accepted Answer

NAFTA follows the principle of national treatment, which means that the member countries must treat foreign goods and services the same as they treat their own domestically produced goods and services. Therefore, in this scenario, the prevailing world price should be accepted in Canada and there should not be any protectionist measures to block imports or subsidies to promote domestic production. This would ensure fair competition and efficient allocation of resources in the market.

The Diagram Below Shows the Domestic Demand and Supply Curves