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:
Significance Level
In statistics, a threshold for determining how significant the results of an experiment are, often used in hypothesis testing to gauge the probability of incorrectly rejecting a true null hypothesis.
Sample Weigh-Ins
A methodology or procedure in research and statistics where initial measurements or data collection are carried out to understand a sample’s characteristics before the main analysis.
Confidence Interval
A spectrum of figures, taken from sample observations, possibly enclosing the value of an undetermined population characteristic.
Margin Of Error
An expression of the amount of random sampling error in a survey's results, indicating the confidence in the reliability of the results.
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