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Trading blocs

Question 1 - short questions

  1. Distinguish between free trade areas (FTAs) and customs unions.

  2. Why do you think trading blocs have come to dominate world trade over the last 40 years?

  3. What do you think are the two main advantages and two main disadvantages of trading blocs?

  4. Outline the likely economic effects on the UK of a decision to withdraw from the EU.

  5. Outline the role of the WTO in terms of trading blocs.

Question 2

In May 2009 the US chip manufacturer, Intel, was fined a record £950m by the European Commission for abusing its dominant position and illegally engaging in anti-competitive behaviour against another US based chip manufacturer, AMD (Advanced Micro Devises). Intel was found guilty of offering generous rebates to a number of computer manufacturers for purchasing their chips, including Acer, Dell, and HP. Intel has roughly 70% of the global market share of chip production.

  1. To what extent is Intel a monopoly supplier?

  2. With reference to the data, explain what is meant by 'abuse of dominant position'.

  3. Evaluate the effectiveness of fines as a deterrents to anti-competitive behaviour.

  4. To what extent could it be argued that European competition policy is simply an example of protectionism?