The phenomenon that occurs when high-cost domestic producers are replaced by low-cost producers within the free trade area is called
A) trade alteration.
B) trade qualification.
C) trade diversification.
D) trade diversion.
E) trade creation.

Question

Quizplus · Accepted Answer

Trade creation occurs when high-cost domestic producers are replaced by low-cost producers within a free trade area, leading to more efficient production and increased trade among member countries.

The Phenomenon That Occurs When High-Cost Domestic Producers Are Replaced