Short Answer and Graphing: Please show all of your work for any partial credit. (20 pts)

1.What is the nominal tariff and the effective rate of protection if there is a 30% tariff on a file cabinet and a 40% tariff on the imported steel?The file cabinet costs $200, half of the price is due to manufacturing costs and half to imported steel. (3 pts)

2. Provide a comparison of production subsidy, a tariff, and a quota using a graph of each in your explanation. (12 points).

3.a)Explain a Customs Union. (2 pts)

b)Why does creating a Customs Union create trade and benefit a country?Use a graph in your explanation.(3 pts)

c)Now assume that a small country (A) forms a Customs Union with another country (C), however that country is not the low cost producer, which is a third country (B).Use a graph in your explanation of the "trade diversion" and "trade creation" due to the formation of this Customs Union between A and C (as we showed in class).(5 pts)