Consider the following hypothetical information pertaining to a country's imports, consumption,
and production of T-shirts following the removal of the MFA quota:
With MFA
Without MFA
(Free Trade)
World price ($/shirt)
$2.00
$2.00
Domestic price ($/shirt)
$2.50
$2.00
Domestic consumption (million shirts/year)
100
125
Domestic production (million shirts/year)
75
50
Imports (million shirts/year)
25
75
MFA, multifibre arrangement.