Assume That U

question 84

Multiple Choice

Assume that U.S.companies are importing the same product from Mexico and Taiwan.The United States enters into an FTA with Mexico but not with Taiwan.Consequently, the United States begins to import more goods from Mexico (due to lower tariffs) than from Taiwan, even though the Mexican products are not any better or cheaper.This is most likely an example of ________.

• A)trade specialization
• B)trade internalization
• C)trade creation
• D)trade diversion

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Definitions:

Inventory

The raw materials, work-in-progress products, and finished goods considered to be the portion of a business’s assets that are ready or will be ready for sale.

Irrelevant Costs

Costs that should not be considered in decision-making because they will not be affected by the decision.

Direct Fixed Manufacturing Costs

Costs that are directly attributable to the production process and do not vary with the level of output but remain constant within a specific time period.

Component

A part or element of a larger system, device, or piece of equipment that is essential to its function.