Figure 8.1 depicts the supply and demand schedules of calculators for Greece,a "small" country that is unable to affect the world price.Greece's supply and demand schedules of calculators are respectively depicted by SG and DG.Assume that Greece imports calculators from either Germany or France.Suppose Germany is the world's low-cost producer who can supply calculators to Greece at $20 per unit,while France can supply calculators at $30 per unit.
Figure 8.1.Effects of a Customs Union
-Consider Figure 8.1.Suppose Greece had formed a customs union with Germany,rather than France.The value of the trade diversion effect would be:
Definitions:
Decision Making Process
The cognitive process leading to the selection of a course of action among several alternatives, often involving a recognition of the problem, information gathering, evaluation of alternatives, and making a final decision.
Herbert Simon
An American economist, political scientist, and cognitive psychologist known for his contributions to decision-making theory and bounded rationality.
Nature's Path
Interpretation not available; could refer to a brand, or ideology focused on natural or sustainable practices, without further context.
Information Search
The phase in the consumer decision-making process where individuals seek out information about products or services to make an informed decision.
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