-China has had a growing interest in African countries. After talking to a lot of

countries, China has taken steps to create a customs union with South Africa.

The restricted FT Price is $15 and the tariff price $5. Draw a diagram explaining

the relation and effects of this agreement.

-Country A was trading with Country C, but now enters into a FTA with country B.

• How does this impact volume of trade with Country B, Country C and overall

volume of trade?

• Illustrate the dynamics using a diagram
• Find the net welfare effects for Country A.

-What effects does an import quota have on a large country?