Chapter20: International Trade
Section: Chapter Questions
Problem 11QP
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Question
India joined Indonesia in a free-trade area. Before the union, India imports 250 thousand traveling bags from Malaysia at S 150 and adds a tariff of $50 on each traveling bags. The price of a traveling bag in Indonesia is S 175.
a. Briefly explain the concept 'trade deflection' with the hypothetical example
b. Briefly explain the fact that 'EPZs are enclaves within each host country'
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