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In Considering "Trade Creation" and "Trade Diversion" in the Formation

Question 28

Multiple Choice

In considering "trade creation" and "trade diversion" in the formation of a customs union Between countries and whether the customs union enhances welfare in a home country Joining the union, two general conclusions that seem valid are that the customs union is Less likely to enhance welfare, other things equal, (i) if the union contains a __________ Number of countries and (ii) if costs of production in the partner countries in the case of Trade diversion differ __________ from costs of production in the outside world (the non-
Member countries) .


A) large rather than a small; greatly
B) large rather than small; only slightly
C) small rather than a large; greatly
D) small rather than a large; only slightly

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