The Creation of a Free Trade Zone May Lead to

question 60

Multiple Choice

The creation of a free trade zone may lead to

• A) a decline in exports.
• B) an increase in taxes and duties levied on a product.
• C) a reduction in the price escalation.
• D) a decline in imports.
• E) an increase in labor costs and overheads.

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Definitions:

Variable Cost

Costs that vary directly with the level of production or sales, such as materials and labor.

Sales Price

The amount of money a buyer pays to purchase a good or service from a seller.

Economic Order Quantity

The ideal order size that minimizes the total costs associated with ordering and holding inventory.

Carrying Costs

Expenses associated with holding inventory, including storage, insurance, taxes, and opportunity costs.