Economics · International Trade
All other things remaining equal, trade diversion resulting from a preferential regional trading agreement generally leads to:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Complete cessation of trade with all non-member countries
- 2No change in international trade volumes or welfare
- 3A reduction in welfare due to shifting trade from a low-cost non-member to a higher-cost member nation✓
- 4An unequivocal enhancement of global economic welfare
Correct answer
A reduction in welfare due to shifting trade from a low-cost non-member to a higher-cost member nation
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