Before the North American Free Trade Agreement (NAFTA) gradually eliminated impo

Question

Before the North American Free Trade Agreement (NAFTA) gradually eliminated import tariffs on goods, the autarky price of tomatoes in Mexico was below the world price and in the United States was above the world price. Similarly, the autarky price of poultry in Mexico was above the world price and in the United States was below the world price. Draw diagrams with domestic supply and demand curves for each country and each of the two goods. as a result of NAFTA, the United States now imports tomatoes from Mexico and the United States now exports poultry to Mexico. How would you expect the following groups to be affected?
a. Mexican and U.S. consumers of tomatoes. Illustrate the effect on consumer surplus in your diagram.

b Mexican and U.S. producers of tomatoes. Illustrate the effect on producer surplus in your diagram.

c. Mexican and U.S. tomato workers.

d. Mexican and U.S. consumers of poultry. Illustrate the effect on consumer surplus in your diagram.

e. Mexican and U.S. producers of poultry. Illustrate the effect on producer surplus in your diagram.

f. Mexican and U.S. poultry workers.

Explanation / Answer

.A.MEXICAN CONSUMERS WILL GET TOMATO AT A BIT HIGHER PRICE AND US CONSUMERS WUD GET AT A LOWER PRICE. B.MEXICAN TOMATO PRODUCERS WUD BE BENIFITED BUT NOT THE US PRODUCERS. C. IT WILL FAVOUR MEXICAN WORKER BUT NOT US WORKER. D.MEXICAN POULTRY CONSUMER WUD GET IT AT A LOWER PRICE BUT US CONSUMER AT A HIGHER PRICE. E.US PRODUCERS WUD BE BENIFITED BUT NOT MEXICO ONES. F.US WORKERS WUD BE BENIFITED NO MEXICAN ONES.

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