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(Solved): Assume that country A and country C form a free-trade area (FTA): i. After forming the free-t ...



Assume that country A and country C form a free-trade area (FTA): i. After forming the free-trade group with country C, determine the quantity of import of good X by country A. [1 mark] ii. Explain and calculate the trade-creation effects in country A due to the formation of the free-trade area. [2 marks] iii. Explain and calculate the trade-diversion effects in country A due to the formation of the free-trade areas. [2 marks] iv. Explain and calculate the net welfare effects for country A due to the formation of the free-trade area. [2 marks]



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