The static welfare effects resulting from the formulation of customs unions are measured by the extent to which it leads to ___________ and ____________.
A)trade creation; trade diversion
B)economies of scale; free trade
C)dynamic effects; trade diversion
D)dynamic effects; trade creation

Question

Quizplus · Accepted Answer

The static welfare effects resulting from the formulation of customs unions are measured by the extent to which it leads to trade creation (increased trade between members due to the elimination of barriers) and trade diversion (shifts in trade from relatively more efficient non-member countries to less efficient member countries).

The Static Welfare Effects Resulting from the Formulation of Customs