Economics 2281 · O Level · Globalisation, free trade and protection

Globalisation, free trade and protection — practice question

Skin creams that help prevent sunburn and are produced in the European Union (EU) are more effective than those manufactured in the United States (US). US tourists buy large supplies of these creams when they travel to Europe. The production of such creams is banned in the US because of the chemicals they contain. In 2013, talks started to end this ban so that production could take place in the US. How is this free trade likely to affect skin cream manufacturers in the US and the EU?

  • AManufacturers in the US gain; manufacturers in the EU gain.
  • BManufacturers in the US gain; manufacturers in the EU lose.
  • CManufacturers in the US lose; manufacturers in the EU gain.
  • DManufacturers in the US lose; manufacturers in the EU lose.

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