If Country a Forms a Customs Union with Country B

question 15

Multiple Choice

If country A forms a customs union with country B, then

• A) country B continues to get tariff revenue from country A's exports sent to B.
• B) all new trade between countries A and B because of the union is known as "trade Creation."
• C) the welfare of countries A and B must necessarily be enhanced, especially if A and B Begin to buy many items from each other that they used to buy from the "outside World."
• D) countries A and B may especially benefit from the union if substantial economies of Scale exist in some of the A and B industries.

---

Definitions:

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Conditioned Stimulus

A previously neutral stimulus that, after being paired with an unconditioned stimulus, elicits a conditioned response in classical conditioning.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without any prior learning.

Extinction

The weakening and eventual disappearance of a learned response; in classical conditioning, it occurs when the conditioned stimulus is no longer paired with the unconditioned stimulus; in operant conditioning, it occurs when a response is no longer followed by a reinforcer.