_____ occurs when lower-cost external suppliers are replaced by higher-cost suppliers within a free trade area.
A) Trade creation
B) Strategic pricing
C) Synergy
D) Trade diversion
E) Protectionism

Question

Quizplus · Accepted Answer

Trade diversion occurs when a free trade area or customs union diverts trade away from lower-cost external suppliers towards higher-cost suppliers within the member countries. This can result in increased costs and reduced efficiency within the trading bloc.

_____ Occurs When Lower-Cost External Suppliers Are Replaced by Higher-Cost