Which Form of Economic Integration Occurs When Participating Countries Abolish

question 160

Multiple Choice

Which form of economic integration occurs when participating countries abolish tariffs on trade among themselves,establish a common tariff on imports from nonmembers,and permit free movement of capital and labor within the organization?

• A) Free trade area
• B) Economic union
• C) Common market
• D) Monetary union

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Definitions:

Market Failure

A situation where the allocation of goods and services is not efficient, often leading to a net social welfare loss.

Goods

Physical items produced for sale or use, characterized by their tangibility and their capacity to satisfy human wants or needs.

Free-rider Problem

A situation in which some individuals consume more than their fair share of a public resource, or shoulder less than a fair share of the costs of its production, without contributing to its provision.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.