Suppose five countries in Central America agree that products are to be freely traded across their borders,they will share a common set of import duties,and that the flow of people will continue to be restricted.This is an example of a

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A common market would also require the free movement of people, so this option is not applicable. A political union would involve the creation of a single government and would go beyond just economic integration, so this option is also not applicable. A free-trade area would eliminate tariffs on goods traded among the countries, but it would not require a common set of import duties. A trade association is a looser form of economic cooperation, lacking the specific agreements described in the scenario. Therefore, the best choice is a customs union, as it involves the elimination of internal tariffs and the adoption of a common external tariff, while still allowing for restrictions on the flow of people.

Suppose Five Countries in Central America Agree That Products Are