Which of the Following Occurs When Lower-Cost External Suppliers Are

question 4

Multiple Choice

Which of the following occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area?

• A) efficiency gain
• B) trade diversion
• C) trade deficit
• D) trade creation

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Definitions:

Capital Expenditures Budget

A financial plan for a company's planned investments in long-term assets and projects.

Cash Budget

A forecast of cash inflows and outflows over a specified period, used to manage cash flow and ensure liquidity.

Factory Overhead Budget

An estimation of all the costs, other than direct labor and direct materials, that are involved in manufacturing a product over a specific period.

Raw Materials Purchases

The acquisition of the basic materials and components required for the production of goods.