An increasingly common form of trade restriction is a non-tariff barrier (NTB).

Question

An increasingly common form of trade restriction is a non-tariff barrier (NTB). In many cases, NTBs are imposed for political reasons, such as the foreign country does not have sufficient labor protection practices or environmental safety standards. Often NTBs are enacted at the behest of a domestic political constituency to protect the domestic industry. Kenya does not have an extensive labor union structure, and its environmental record is spotty. Canada’s tea businesses do not like the competition from Kenyan tea and have persuaded Canada’s parliament to impose an NTB for the past two decades. Suppose, however, that Canada's parliment will remove the NTB at the beginning of 2016. Which of the answer choices gives the most likely outcome of tea production for Canada and Kenya during 2015 and 2016?

A. 2015: 2,050 pounds of tea produced by Canada and 4,400 pounds of tea produced by Kenya; 2016: 2,500 pounds of tea produced by Canada and 3,960 pounds of tea produced by Kenya.

B. 2015: 900 pounds of tea produced by Canada and 2,000 pounds of tea produced by Kenya; 2016: 700 pounds of tea produced by Canada and 1,450 pounds of tea produced by Kenya.

C. 2015: 4,200 pounds of tea produced by Canada and 6,200 pounds of tea produced by Kenya; 2016: 4,850 pounds of tea produced by Canada and 6,950 pounds of tea produced by Kenya.

D. 2015: 3,300 pounds of tea produced by Canada and 4,600 pounds of tea produced by Kenya; 2016: 2,850 pounds of tea produced by Canada and 6,400 pounds of tea produced by Kenya.

Explanation / Answer

B. 2015: 900 pounds of tea produced by Canada and 2,000 pounds of tea produced by Kenya; 2016: 700 pounds of tea produced by Canada and 1,450 pounds of tea produced by Kenya.

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