Multiple Choice
Suppose country X currently does not produce widgets.Instead,
It imports widgets from country Z.Then country X establishes a
Preferential trading agreement with country Y.Following the
Formation of the PTA, it imports widgets from country Y.What
Has occurred?
A) There is trade diversion and a welfare loss for country X.
B) There is trade creation and a welfare loss for country Y.
C) There is trade diversion and a welfare gain for country X.
D) There is trade creation and a welfare gain for country Y.
Correct Answer:
Verified
Correct Answer:
Verified
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