About to join denmark in a free trade area

Assignment Help Business Economics

Reference no: EM131101402

The Netherlands is about to join Denmark in a free trade area. Before the union, The Netherlands imports 10 million DVD recorders from the rest of the world at $100 and adds a tariff of $30 on each recorder. It takes $110 to produce a DVD recorder in Denmark.

a. Once the free trade area is formed, what will be the cost to The Netherlands of the DVD recorder trade diverted to Denmark?

b. How much extra imports would have to be demanded by The Netherlands to offset the trade-diversion cost?

Reference no: EM131101402

Questions Cloud

What is the equilibrium outcome : Let the two firms be located at 0 and 1 on the unit interval. There are n consumers located uniformly along the interval, each with a reservation value of V . They incur transportation costs of t per unit of distance traveled from their location to t..

What is the expected rate of return : Suppose a handbill publisher can buy a new duplicating machine for $2000 and the duplicator has a 1-year life. The machine is expected to contribute $2200 to the year’s net revenue. Instructions: Round your answer to the nearest whole number. a. What..

Average variable cost and the profit maximising quantity : The government introduces a new regulation according to which all carpenters must have a license. Assuming that the market for carpentry services is perfectly competitive, explain the effect of the licence on an individual carpenter's (i.e. the suppl..

Full-employment-noninflationary level of real output : Suppose the full-employment, noninflationary level of real output is GDP3 (not GDP2) in the economy depicted in the figure below. If the economy is operating at GDP2 instead of GDP3, the standardized budget is

About to join denmark in a free trade area : The Netherlands is about to join Denmark in a free trade area. Before the union, The Netherlands imports 10 million DVD recorders from the rest of the world at $100 and adds a tariff of $30 on each recorder. It takes $110 to produce a DVD recorder in..

Face value bond with an annual coupon : A $1,000 face value bond, with an annual coupon of $32, one year to maturity and a purchase price of $975 has:

Discuss the concept of market equilibrium : Create a supply and demand graph in (Excel) that demonstrates the relationship between the amount buyers are willing to purchase and the quantity available. You may select your own data points, but you must discuss the relationship between supply and..

Gross domestic product-overall effects of trade diversion : In a presentation about Serbia’s future entry into the European Union, the speaker indicates that the effects of trade creation will be equal to about 2% of Serbia’s gross domestic product and the overall effects of trade diversion will be equal to a..

Employing constant rate of growth forecasting model : Fred’s Hardware and Hobby House expects its sales to increase at a constant rate of 8 percent per year over the next three years. Current sales are $100,000. Forecast sales for each of the next three years. What are some of the hazards of employing a..

User Account

All Pages