A Country will have positive static benefit from a customs union if
A)the resulting trade diversion is significantly stronger than the resulting trade creation
B)if the resulting trade creation is significantly stronger than the resulting trade diversion
C)if the price of import significantly increases over the free trade price without tariff
D)if there is significant stimulus for investment

Question

Quizplus · Accepted Answer

A country will have a positive static benefit from a customs union if the resulting trade creation is significantly stronger than the resulting trade diversion. This means that the increase in trade between members of the customs union should outweigh any decrease in trade with non-members.

A Country Will Have Positive Static Benefit from a Customs