The country of Argonia and the country of Berylia imposed tariffs on i

QUESTION

The country of Argonia and the country of Berylia imposed tariffs on imports from all countries. They set up a free trade area, removing all trade barriers between themselves but maintaining tariffs on imports from the rest of the world.

Argonia now begins to import sugar from Berylia. Previously, Argonia was indigenously producing sugar at a higher cost. Thus, Argonia benefits from this transaction. This is known as:

A. trade creation

B. strategic pricing

C. synergy

D. trade diversion

E. protectionism

ANSWER

A