Multiple Choice
Suppose the countries of Iceland and Norway set up a free trade area, eliminating all trade barriers between themselves but maintaining tariffs on imports from the rest of the world. Now, Iceland begins to import wool from Norway. However, Iceland had previously been importing wool from England, which produced wool more cheaply than both Iceland and Norway. What is this an example of?
A) trade creation
B) strategic pricing
C) synergy
D) trade diversion
E) protectionism
Correct Answer:
Verified
Correct Answer:
Verified
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