Answer the question(s)below based upon the following diagram which depicts country A's market for its importable.

-Refer to the figure above.If A forms a customs union with C,the value of trade diversion will be

Question

Answer the question(s)below based upon the following diagram which depicts country A's market for its importable.
 
-Refer to the figure above.If A forms a customs union with C,the value of trade diversion will be

Quizplus · Accepted Answer

The value of trade diversion is the amount of trade that is diverted from the low-cost producer to the high-cost producer due to the formation of a customs union. In this case, the low-cost producer is B, and the high-cost producer is C. Before the formation of the customs union, A imported $20,000 worth of goods from B and $10,000 worth of goods from C. After the formation of the customs union, A will import $30,000 worth of goods from C and $0 worth of goods from B. Therefore, the value of trade diversion is $20,000.

Answer the Question(s)below Based Upon the Following Diagram Which Depicts