Figure 8.1 depicts the supply and demand schedules of calculators for Greece,a "small" country that is unable to affect the world price.Greece's supply and demand schedules of calculators are respectively depicted by SG and DG.Assume that Greece imports calculators from either Germany or France.Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $20 per unit,while France can supply calculators at $30 per unit.
Figure 8.1.Effects of a Customs Union
-Consider Figure 8.1.With free trade,Greece imports:
A) 3 calculators from France
B) 5 calculators from France
C) 3 calculators from Germany
D) 5 calculators from Germany
Correct Answer:
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