A-LevelEconomicsInternational economic issues9708/12 · Oct/Nov 2017 · Q251 Mark

Country X forms a customs union with country Y. X then ceases to produce its own cars and instead imports cars from Y. Country Y diverts some of its car exports to X from country Z. How is this likely to affect car prices in X and Z? [Table mapping country X and country Z car prices for options A, B, C, D]

Adecrease decrease

Bdecrease increase

Cincrease decrease

Dincrease increase

✓ Correct answer

B: decrease increase

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, Oct/Nov 2017 Paper 1 Variant 2, question 25.

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