Please answer all questions. Allot the space you give to each answer corresponding to the marks you will receive.
Answers are Due in to the Department of Economics Office, EM023, no later than 5pm on Monday 6 November.
Answers must also be emailed to stephen.kinsella@ul.ie by the same deadline.
Answers must be in Times New Roman, size 12, single spacing. Include your name and student number on the first page. This is a graded assignment.
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(a) When the original EEC 6 completed the customs union established by the Treaty of Rome, it was argued that trade creation exceeded trade diversion for industrial goods but not for agricultural goods. Explain, using graphical analysis, why this was the case. (20 Marks)
(b) The predicted gains from the completion of the single market were much larger than the small gains estimated from the completion of the customs union. Give three reasons why this was the case. For each reason, carefully explain the economic arguments using diagrams where appropriate (20 marks)
(c) Is there any evidence that the EU is starting to realise these gains? Briefly explain your answer. (10 marks)
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