The trade-creation effect refers to:
a. a reduction in economic efficiency as a result of a preferential trade agreement.
b. a production shift to a higher-cost producer as a result of a preferential trade agreement.
c. the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home.
d. diversion of production from a country that has comparative advantage.
e. a production shift to a country that does not have comparative advantage.
c
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Tariffs are ________
A) taxes levied on goods imported into the United States B) levied by state and local governments C) the primary source of federal revenues D) taxes on goods exported from the United States
Suppose the quantity demanded of ice cream cones increases from 400 to 425 cones a day when the price is reduced from $1.50 to $1.25. In this situation, the elasticity of demand, calculated using the average method, is
A) 3. B) 1. C) 0.33. D) 1.33.