There have been discussions regarding establishing a Free-Trade agreement between the European Union and Mercosur (Argentina, Brazil, Paraguay, and Uruguay). "The agreement would create the largest free-trade zone in the world, cut tariffs for many products, and simplify customs procedures. For the EU, this means more exports in spheres like machinery, automobiles and pharmaceuticals, while Mercosur countries would export more meat, poultry, sugar and other agricultural products to the European single market."

A. The U.S. Market for Bicycles B. The Market for U.S. Bicycle Imports Price Price ($ per bike) ($ per bike) 330 b+d C Tariff C 300 Demand curve b for imports Do Mo =1.0 Din= Do - SJ 0 0.6 0.8 1.4 1.6 Quantity 0 M. = 0.6 Quantity imported (millions of bikes per year) (millions of bikes per year) M, = 0.6 AM = 0.4 Mo = 10