In Considering "Trade Creation" and "Trade Diversion" in the Formation

Multiple Choice

In considering "trade creation" and "trade diversion" in the formation of a customs union Between countries and whether the customs union enhances welfare in a home country Joining the union, two general conclusions that seem valid are that the customs union is More likely to enhance welfare, other things equal, (i) the __________ the initial tariff rates of the home country on imported goods, and (ii) the __________ the demand and supply curves of the affected products in the home country.

A) higher; more elastic
B) higher; less elastic
C) lower; more elastic
D) lower; less elastic