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

question 16

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

-According to Figure 8.1, the formation of a Greece/Germany customs union would result in

• A) $20 of trade diversion.
• B) $40 of trade diversion.
• C) $20 of trade creation.
• D) $40 of trade creation.

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Definitions:

Managerial Accounting Report

Comprehensive reports generated through managerial accounting processes, supporting detailed financial analysis and decision-making within an organization.

Production Department

The division within a business that is responsible for the manufacture of goods.

Direct Labor

The labor costs directly attributable to the production of goods or services, including wages of workers who physically convert materials into finished products.

Work In Process

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