A Product Will Be Internationally Traded as Long as the Pretrade

question 33

Multiple Choice

A product will be internationally traded as long as the pretrade price differential between the trading partners is:

• A) Greater than the cost of transporting it between them
• B) Equal to the cost of transporting it between them
• C) Less than the cost of transporting it between them
• D) None of the above

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Definitions:

Multilateral Free Trade Agreement

An agreement between three or more countries to reduce trade barriers and tariffs to encourage trade and economic cooperation among them.

Tariffs

Taxes imposed on imported goods, typically to protect domestic industries or to raise government revenue.

Trade Barriers

Measures implemented by countries to restrict or control the flow of goods and services across its borders.

Central American Free Trade Agreement

A trade agreement aimed at reducing tariffs and trade barriers among the United States and Central American nations.