Assume That the Formation of a Customs Union Turns Out

question 63

Multiple Choice

Assume that the formation of a customs union turns out to include the lowest-cost world producer of the product in question.Which effect could not occur for the participating countries?

• A) Trade creation-production effect
• B) Trade creation-consumption effect
• C) Trade diversion
• D) Scale economies and competition

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Definitions:

Developing Countries

Nations with low to middle industrialization levels and lower standards of living and Human Development Index (HDI) compared to developed countries.

Poorest

Referring to the individuals or groups with the lowest income and wealth levels in a society.

Soft Loans

Loans that are offered with more favorable terms than market loans, typically including lower interest rates and longer repayment periods.

Developing Countries

Nations with a lower level of industrialization, lower standard of living, and lower Human Development Index compared to developed countries.