Suppose Chile joins a trade bloc formed by Argentina, Brazil, Paraguay, and Uruguay. Before joining the trade bloc, the Chilean government has a tariff of 30 percent on imported meat, and Chile's imports of 40,000 tons of meat came exclusively from the United States. The U.S. sold meat at a price of $2,000 per ton in the international market. After joining the trade bloc, Chile switched to importing meat from the other member countries at a price of $2,100 per ton. Its import increased to 50,000 tons. Calculate the amount of trade creation and trade diversion as a result of this change. For this product, did Chile gain economic well-being from joining the trade bloc? If so, then how much? If not, then by how much would Chilean imports of meat have to increase for Chile to benefit from joining the trade bloc?

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The Answer of Suppose Chile joins a trade bloc formed by Argentina, Brazil, Paraguay, and Uruguay. Before joining the trade bloc, the Chilean government has a tariff of 30 percent on imported meat, and Chile's imports of 40,000 tons of meat came exclusively from the United States. The U.S. sold meat at a price of $2,000 per ton in the international market. After joining the trade bloc, Chile switched to importing meat from the other member countries at a price of $2,100 per ton. Its import increased to 50,000 tons. Calculate the amount of trade creation and trade diversion as a result of this change. For this product, did Chile gain economic well-being from joining the trade bloc? If so, then how much? If not, then by how much would Chilean imports of meat have to increase for Chile to benefit from joining the trade bloc?

Suppose Chile Joins a Trade Bloc Formed by Argentina, Brazil