The table below shows the prices in Canada of one kilogram of cheddar cheese from 3 different countries. Assume that all cheddar cheese is identical. 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 percent 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 from 3 different countries. Assume that all cheddar cheese is identical.  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 percent tariff on cheese imported from other countries. From which country will Canada now buy its cheese?

Quizplus · Accepted Answer

Since Canada now has a free-trade agreement with the United Kingdom, it can import cheese from the United Kingdom without any tariffs. However, Canada still has a 40% tariff on cheese imported from other countries, which includes the United States. Therefore, it would be most beneficial for Canada to buy all of its cheese from the United Kingdom, which it can now do without any tariffs.

The Table Below Shows the Prices in Canada of One