If a Customs Union Leads to a Large Amount of Trade

question 6

True/False

If a customs union leads to a large amount of trade diversion relative to trade creation,it may be beneficial to world welfare.

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Definitions:

Government Operation

Activities carried out by the government, including regulation, provision of public services, and maintenance of law and order.

Average Costs

The total costs divided by the total output produced, a measure of cost efficiency for production.

Social Welfare

A concept concerning the well-being, health, and economic security of society as a whole.

Synergies

The increased effectiveness or efficiencies created when two or more elements or companies work together.