6.The theory of customs union is a special case of the theory of:

a.effective protection

b.the second best

c.the product cycle

d.comparative advantage

7.Which is a stumbling block to successful economic integration among groups of

developing nations?

a.benefits are not evenly distributed among nations

b.many developing nations are not willing to relinquish part of their newly-acquired

sovereignty to a supranational community body, as required for successful economic

integration

c.the complementary nature of their economies and competition for the same world

markets for their agricultural exports

d.all of the above

8. A customs union that allows for the free movement of labour and capital among its

member nations is called a:

a.preferential trade arrangement

b.free-trade area

c.common market

d.all of the above

9.A trade-diverting customs union:

a.increases trade among union members and with non-member nations

b.reduces trade among union members and with non-member nations

c.increases trade among members but reduces trade with non-members

d.reduces trade among union members but increases it with non-members

10.A trade-creating customs union is one where:

a. lower-cost imports from outside the customs union are replaced by higher-cost imports

from a union member

b. some domestic production in a member nation is replaced by lower-cost imports from

another member nation

c. trade among members increases but trade with non-members decreases

d. trade among members decreases while trade with non-members increases