Answer:
Group A is correct option which best describes the free trade implications.
Explanation:
When the Free trade agreements are signed the consumers have variety of options available because now there are no tariffs or trade barrier imposed on the product coming from other countries. This means that the customer in US can consider products coming from Canada and Mexico as an alternative to native companies.
Now the revenue losses from the free trade agreements of the native companies will start increasing because now there are greater number of competitors in the US market. All they have to do is lower their cost to decrease their prices to compete foreign companies.
When the FTA is formed, the companies shift their manufacturing operations to a country where the infrastructure costs, labor costs lower and utility costs lower. Such circumstances creates favorable situations for the foreign investments.
