Figure 81 Depicts the Supply and Demand Schedules of Calculators for for Greece

question 139

Multiple Choice

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.The value of the trade diversion effect, resulting from the Greece/France customs union, equals

• A) $5.
• B) $10.
• C) $15.
• D) $20.

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Definitions:

Peak Period

The time frame during which demand for a service or product is at its highest.

Spoilage

The process by which products deteriorate in quality or become unfit for consumption or use over a period.

Reserved Capacity

A business strategy where a portion of production capability or service availability is set aside for a particular customer or project.

Revenue Management

Is the practice of strategically controlling inventory and pricing to maximize revenue, commonly used in industries like hotels, airlines, and hospitality.