In General, Other Things Equal, Trade Creation Is More Likely

Multiple Choice

In general, other things equal, trade creation is more likely to outweigh trade diversion for a home country forming a customs union with partner countries (i) if the total number of countries forming the union is __________, and (ii) if the level of tariffs in the home country prior to the formation of the union is __________.

A) small rather than large; high rather than low
B) small rather than large; low rather than high
C) large rather than small; high rather than low
D) large rather than small; low rather than high