Suppose that the constant marginal cost of producing an extra automobile is $11,000 in Canada , $8,000 in the United States , and $12,000 in Japan . a.Under free trade, would Canada produce its own cars or import them? If it would import them, from where would the imports come? POSSIBLE RESPONSE: Canada would import automobiles from the United States . b.If Canada had a 100% tariff on all auto imports, would it produce its own autos or import them? If it would import them, from where would the imports come? POSSIBLE RESPONSE: With a 100% tariff on imported foreign automobiles, Canadian consumers will buy only Canadian autos because U.S. autos will cost $16,000 and Japanese autos will cost $24,000 to the Canadian consumer. c.If Canada decided to join a customs union with the United States (with a uniform external tariff of 100%), what would the domestic price of autos be in Canada ? POSSIBLE RESPONSE: U.S. autos would cost $8,000 in Canada and Japanese autos would cost $24,000. Canada will import autos from the United States , and the Canadian domestic price will be $8,000. If Canada decided to join a customs union with the United States (with a uniform external tariff of 100%), will there be trade creation, trade diversion, or both? Explain.