Which of the Following Is True of Free Trade Zones

question 20

Multiple Choice

Which of the following is true of free trade zones (FTZs) ?

• A) In an FTZ, payment of import duties is postponed until the product leaves the FTZ area and enters the country.
• B) FTZs operate throughout the world, replacing imported goods with domestic goods.
• C) An FTZ is, in essence, a taxable enclave and considered part of the country as far as import regulations are concerned.
• D) An FTZ benefits export companies but does not offer any advantages to an importer.
• E) The creation of FTZs typically increases taxes, duties, surcharges, and freight charges on imported goods.

---

Definitions:

Excessive Cancellations

A higher than normal rate of voided orders or terminated services, often indicating problems in business operations or customer satisfaction.

Backup Source

An alternative option or supplier that can be used in case the primary source is unavailable or inadequate.

Overbooking

A practice where a service provider (like airlines or hotels) accepts more reservations than there is capacity, anticipating that there will be some cancellations.

Wasted Capacity

The portion of production capacity that goes unused or is not effectively utilized.