Assume that Denmark, a member of the European Union, is cont…
Assume that Denmark, a member of the European Union, is contemplating the enactment of a protective tariff for its fledgling CD industry due to domestic political and economic pressures. Assume further that the EU has a tariff that it has also enacted for all CD manufacturers within the EU that is considerably lower than the one that is being proposed in Denmark. The policy behind the lower EU tariff is to promote freer trade even at the risk of destroying some of the weaker manufacturers in that organization. In this situation: