国际经济学chapter14课后练习答案及课外练习题.docVIP

PAGE 98Caves/Frankel/Jones - World Trade and Payments: An Introduction, Tenth Edition Chapter 14Preferential Arrangements and Regional Issues in Trade Policy PAGE 99 Chapter 14Preferential Arrangements andRegional Issues in Trade Policy ?Suggested Answers to Textbook Questions 1. As a customs union encompasses a larger portion of the trading world, it becomes more likely that production will be taking place within a member country. Therefore, the chance that the formationof the customs union leads to trade creation increases, while the chance of trade diversion decreases. Thus, customs unions that include a larger fraction of the trading world are more likely to lead to welfare gains. 2. If tariffs are eliminated only on some goods but not on others, then tariffs are distorting the relative prices between goods across countries. This leads to the situation where production may occur in the inefficient location. To eliminate this possibility, tariffs must be eliminated on all goods. This is simply a restatement of the fact that it is comparative, not absolute, advantage that is important in determining trade patterns. 3. If real incomes increase for member countries within a customs union, then the demand for all goods increases. If the demand for exported goods is more income elastic than the demand for imported goods, then the relative price of imported goods will fall, leading to an improvement in the terms of trade for the customs union vis-a-vis the rest of the world. However, if the demand elasticities are not as above, then the terms of trade may worsen for the customs union. 4. The eight central European economies recently added to the EU were already experiencing significant increases in trade with EU nations. Admission to the EU should lead to trade creation as tariffs and barriers to trade are eliminated. The amount of trade diversion depends on the level of tariffs on products from outside the EU. It’s likely that external tariffs are lower than prior