The United States is a large country. It produces two goods, beers and brooms. It
imports beers from Mexico and exports brooms to Mexico. Mexico is a small
country. It produces two goods, beers and brooms. It imports brooms from U.S. and
exports beers to U.S..
11. If U.S. imposes a tariff on beer imports from Mexico,
a. the trade volume falls and the terms of trade declines for U.S..
b. the trade volume falls and the terms of trade increases for U.S..
c. the trade volume increases and the terms of trade declines for U.S..
d. the trade volume falls at a constant terms of trade.
e. none of the above.
B