Which of the Following Can Be Termed as Trade Diversion

question 29

Multiple Choice

Which of the following can be termed as trade diversion?

• A) The imposition of tariffs on the import of a good.
• B) Subsidizing domestic production to reduce imports and support domestic production.
• C) Banning trade in a certain good to protect an infant industry in the country.
• D) Creation of a trade bloc results in buying a good from a high-cost member nation rather

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Definitions:

Economic Efficiency

Economic efficiency occurs when all resources are allocated optimally to serve each individual or entity in the best way while minimizing waste and inefficiency.

Competitive Market

A market structure characterized by a large number of buyers and sellers, where no single entity can dictate prices.

External Benefit

A benefit that an activity or transaction provides which is not captured by the consumer or producer, benefiting others in society.

Public Good

A product or service that is made available to all members of a society, typically funded by the government, and characterized by non-excludability and non-rivalry.