If a customs union includes the lowest-cost world producer of a product, then member countries:
a. will always be better off in trade with that product.
b. will always be worse off in trade with that product.
c. can be better off or worse off depending on the strengths of the trade diversion and trade creation effects for that product.
d. will no longer export or import that product.
Ans: a. will always be better off in trade with that product.
You might also like to view...
Why do banking panics normally lead to recessions?
What will be an ideal response?
Due to diminishing marginal returns, the ultimate source of economic growth in the United States from 1949 to 2010 has been
A) capital. B) labor. C) total factor productivity. D) Capital, labor, and total factor productivity are all subject to diminishing marginal returns, and therefore are all equally responsible for economic growth.