SCENARIO: ELECTRIC FAN TRADE

SCENARIO: ELECTRIC FAN TRADE
u.S.firms can produce and sell electric fans for $25.The United
States can also import electric fans from China at $40 each and
From Canada at $45 each.Electric fans made in the United
States, China, and Canada are identical.Currently, the United
States imposes a 30% tariff on imported electric fans.
Reference: Ref 11­2
(Scenario: Electric Fan Trade) For the United States, are there
Trade diversion losses, trade creation gains, or both as a result of
The formation of NAFTA?

A) There are only trade diversions losses
B) There are only trade creation gains.
C) There are neither trade creation gains nor trade diversion losses.
D) There are both trade creation gains and trade diversion losses.