The customs union could lead to losses for the home country if:
a. the other country in the customs union is the most efficient producer
b. the other country in the customs unions is not the most efficient producer.
c. there are other countries outside the customs union that are inefficient.
d. all countries are efficient producers.
Ans: b. the other country in the customs unions is not the most efficient producer.
You might also like to view...
It has been argued that a monopolistically competitive industry involves "waste" because
A) there is too much product differentiation making shelves too crowded. B) they end up producing to the right of the minimum of the average total cost curve and the price is below the marginal cost. C) the firms do not equate marginal cost to marginal revenue to find the profit maximizing price and output. D) the firms do not produce at the minimum of the average total cost curve and price is above marginal cost.
If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is
a. fixed b. government-determined c. set by the value of gold d. said to float e. not in equilibrium