All of the following are true of trade diversion EXCEPT that it ________.
A) is the opposite of trade creation
B) can unintentionally reward a less-efficient producer within the trading bloc
C) can increase prices of products
D) guarantees consumers a wider selection of goods

Question

Quizplus · Accepted Answer

Trade diversion can increase prices of products and unintentionally reward a less-efficient producer within the trading bloc. However, it does not guarantee consumers a wider selection of goods. In fact, it can lead to a reduction in the variety of goods available to consumers if trade shifts away from more efficient non-member producers to less efficient member producers.

All of the Following Are True of Trade Diversion EXCEPT