A free trade area gains all the benefits associated with being a member of a customs union while avoiding all the costs associated with being a member of a customs union. Evaluate this statement.

Economics

IGCSE&ALevel

CAIE

Exam No：9708_s25_qp_41 Year：2025 Question No：5

Answer:

11.6.2 distinction between a free trade area, a customs union, a monetary union and full economic union

11.6.3 trade creation and trade diversion

6.1.2 benefits of specialisation and free trade (trade liberalisation), including the trading possibility curve

6.1.3.1 measurement of the terms of trade

6.1.3.2 causes of changes in the terms of trade

6.1.3.3 impact of changes in the terms of trade

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