The Main Difference Between a Free-Trade Area and a Customs

question 170

True/False

The main difference between a free-trade area and a customs union is that the members of a free-trade area agree to treat trade with all nonmember nations in a similar manner.

---

Definitions:

Economic Model

A simplified representation of an economic process or market designed to predict real-world behaviors and outcomes.

Production Possibility Frontier

A curve depicting all the possible combinations of two goods that can be produced within a given economy when resources are fully and efficiently utilized.

Productive Capacity

The maximum output a firm or economy can produce with the current level of resources and technology, indicating potential growth limits.

Efficiently

The ability to achieve a goal or fulfill a function with the least waste of time and effort; maximizing productivity with minimum wasted effort or expense.