_____ Occurs When Lower-Cost External Suppliers Are Replaced by Higher-Cost

question 83

Multiple Choice

_____ occurs when lower-cost external suppliers are replaced by higher-cost suppliers within a free trade area.

• A) Trade creation
• B) Strategic pricing
• C) Synergy
• D) Trade diversion
• E) Protectionism

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Definitions:

Production Possibilities Curves

A curve depicting all maximum output possibilities for two goods, given a set of inputs, highlighting the trade-offs in production choices.

Domestic Supply Curves

Graphical representations of the relationship between the price of a good or service and the quantity of that good or service supplied domestically.

Domestic Demand Curves

Graphical representations showing the quantity of a particular good or service that consumers in a domestic market are willing and able to purchase at various prices.

Import Demand Curves

Graphs showing the quantities of a good that an economy is willing to import at different price levels.