When Products from a High-Cost Country Within a Customs Union

question 78

Multiple Choice

When products from a high-cost country within a customs union replace imports from a low-cost country that is not a member of the union, this is called:

• A) trade creation.
• B) trade diversion.
• C) trade deflection.
• D) trade development.

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Definitions:

Merchandise On Hand

The inventory of goods that a retailer has available for sale at any given time.

Trade Discounts

Reductions from the list price of goods or services provided by a seller to a buyer in a commercial transaction.

Wholesaler

An entity that buys goods in large quantities from manufacturers or distributors and sells them to retailers or other businesses.

Retailer

A business that sells goods to the public in relatively small quantities for use or consumption rather than for resale.