QUESTION 7 Which form of economic integration occurs when participating countrie

Question

QUESTION 7 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? abor within the organization a. Monetary union b. Economic union O C. Free trade area O d. Common market QUESTION 8 Assume that the formation of a customs union turns out to include the lowest-cost world producer of the product in question. Which is the most likely outcome of this policy? O a. Creation of economies of scale o b. Trade diversion c. Creation of economies of scope o d. Trade creation

Explanation / Answer

Ans)
7.
d. Common markets
Common markets abolish tariffs on trade among themselves establish a common tariff on imports from nonmembers and permit free movement

8.
b. Trade diversion
Trade diversion occurs when the trade is diverted from a more efficient to a less efficient producer.

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