SCENARIO: ELECTRIC FAN TRADE

Multiple Choice

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) Now suppose that the United
States forms a free­trade area (NAFTA) with Canada and Mexico.
From which country will the United States import fans?

A) China
B) Canada
C) It will import fans from neither China nor Canada.
D) It will import fans from both China and Canada.