A Trade-Diverting Customs Union Is More Likely to Lead to Trade

question 14

Multiple Choice

A trade-diverting customs union is more likely to lead to trade creation:

• A)the lower are the pre-union trade barriers of the member countries
• B)the lower are the customs union's barriers on trade with the rest of the world
• C)the smaller is the number of countries forming the customs union and the smaller their size
• D)the more complementary rather than competitive are the economies of the nations forming the customs union

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Definitions:

Mixed

In finance, this term could refer to an investment portfolio comprising various types of assets, aimed at diversifying risk.

Multiple

A financial metric used to compare a company's market value to its earnings, sales, or other financial measures, often indicating how much investors are willing to pay per dollar of earnings or assets.

Total Variable Costs

Total variable costs are expenses that vary directly with changes in production or sales volume, such as raw materials and labor costs tied to production levels.

Activity Level

A measure of the volume of production or services that influences costs and revenue within a specified period.