Question

Roll over each product listed and after reviewing the related hint, click and drop them under either trade creation or trade diversion.

Trade Creation	Trade Diversion

solar Panels – France Imports Expensive solar peels from Spain, (Both area EU Members) rather than importing them from China at a cheaper cost.

Textiles – U.S.A imports cheaper textiles from Mexico because Mexico belongs to NAFTA

Computer Chips- Canada imports computer chips at a higher cost from the U.S.A(A NAFTA partner) Rather than importing them from China at a cheaper rate

Sugar-U.S.A imports sugar from Canada and Mexico even though both countries belong to NAFTA

Answer 1

Trade Creation

Textiles – U.S.A imports cheaper textiles from Mexico because Mexico belongs to NAFTA

Sugar-U.S.A imports sugar from Canada and Mexico even though both countries belong to NAFTA

Trade Diversion

solar Panels – France Imports Expensive solar peels from Spain, (Both area EU Members) rather than importing them from China at a cheaper cost.

Computer Chips- Canada imports computer chips at a higher cost from the U.S.A(A NAFTA partner) Rather than importing them from China at a cheaper rate