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North american free trade agreement

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Reference no: EM131633536

a) The 2010 oil spill in the Gulf of Mexico caused the oil firm BP and the US government to greatly increase purchases of boat services, various oil absorbing materials, and others to minimize damage from the spill. Use side-by-side firm and market diagrams to show the effect of such shift in demand in one such industry in both short run and long run. 

b) The 1995 North American Free Trade Agreement provides for two-way, long-haul trucking across the US-Mexican border. US truckers have objected arguing that the Mexican trucks don't have to meet the same environmental and safety standards as US trucks. They are concerned that the combination of these lower fixed costs and lower Mexican wages will result in Mexican drivers taking business from them. 

What would be the short-run and long-run effects of allowing entry of Mexican drivers on market price, quantity and the number of US truckers?

Reference no: EM131633536

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