If a Customs Union Leads to a Large Amount of Trade

question 5

True/False

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

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Definitions:

Equilibrium Quantity

The amount of goods or services available that matches the amount desired by consumers at the price where supply and demand balance.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Tax Imposition

The act of placing a financial charge or levy upon a taxpayer by a governmental organization.

Buyers

Individuals or entities that purchase goods or services from sellers in exchange for money or other valuable considerations.