jeans from China at $20 each. With the 100% tarif the domestic price in Australia is $40. The cost in Thailand is $30. Australia and Thailand form a customs union. Australia imports 1500 pairs from Thailand and none from China. What are the net gains or losses to Australia of forming a customs

ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter17: International Trade
Section: Chapter Questions
Problem 2.6P
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a) Assume that Australia imports 1000 pairs of
jeans from China at $20 each. With the 100% tariff,
the domestic price in Australia is $40. The cost in
Thailand is $30. Australia and Thailand form a
customs union. Australia imports 1500 pairs from
Thailand and none from China. What are the net
gains or losses to Australia of forming a customs
union?
Transcribed Image Text:a) Assume that Australia imports 1000 pairs of jeans from China at $20 each. With the 100% tariff, the domestic price in Australia is $40. The cost in Thailand is $30. Australia and Thailand form a customs union. Australia imports 1500 pairs from Thailand and none from China. What are the net gains or losses to Australia of forming a customs union?
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