Because It Is Difficult to Negotiate Multilateral Trade Agreements

question 16

Multiple Choice

Because it is difficult to negotiate multilateral trade agreements,
Some economists argue that preferential trade agreements are
Always beneficial since they represent a movement toward freer
Trade, which is better than no movement at all.Is this argument
Always correct?

• A)Yes; any movement toward freer trade is better than no movement at all.
• B)No; some preferential trade agreements may have higher trade diversion costs than trade creation gains.
• C)Yes; all preferential trade agreements have higher trade creation gains than trade diversion losses.
• D)No; all preferential trade agreements have higher trade diversion losses than trade creation gains.

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Definitions:

Variable Cost

Expenses that fluctuate in direct proportion to the amount of production or sales, including items like labor and materials.

Machine Hour

A measure of production time, where costs are attributed based on the number of hours a machine is operated.

Mixed Cost

A cost that contains both variable and fixed cost elements, changing with the level of output but also involving a constant component.

Press Setup

The preparation and adjustment of printing presses before a printing run.