Suppose Country X Currently Produces Widgets.Then It

Multiple Choice

Suppose country X currently produces widgets.Then it
Establishes a preferential trading agreement with country Y.
Following the formation of the PTA, country X no longer produces
Widgets and imports widgets from country Y.What has occurred?

A) There is trade diversion and a welfare gain for both country X and country Y.
B) There is trade diversion, a welfare gain for country Y, and a welfare loss for country X.
C) There is trade creation and a welfare gain for both country X and country Y.
D) There is trade creation, a welfare gain for country Y, and a welfare loss for country X.