When products from a highcost country within a customs union
Replace imports from a lowcost country that is not a member of
The union, this is called:
A)trade creation.
B)trade diversion.
C)trade deflection.
D)trade development.

Question

When products from a high­cost country within a customs union
Replace imports from a low­cost country that is not a member of
The union, this is called:
A)trade creation.
B)trade diversion.
C)trade deflection.
D)trade development.

Quizplus · Accepted Answer

This situation is called trade diversion, which refers to the shift in trade patterns that occurs when a customs union, such as the European Union, replaces low-cost imports from non-member countries with higher-cost imports from member countries. This can occur because the customs union eliminates tariffs and other trade barriers among member countries, making their products more competitive in the larger market.

When Products from a High­cost Country Within a Customs Union

When Products from a Highcost Country Within a Customs Union