Suppose Country a and Country B Imposed Tariffs on Imports

question 21

Multiple Choice

Suppose Country A and Country B imposed tariffs on imports from all countries,and then they set up a free trade area,scrapping all trade barriers between themselves but maintaining tariffs on imports from the rest of the world.Country A began to import sugar from Country B.Country A had previously been producing sugar at a higher cost.Which of the following has occurred?

• A)Trade creation
• B)Trade balancing
• C)Trade synergy
• D)Trade diversion

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