Common Markets Flashcards
1
Q
What is a common market?
A
Is a group of countries between which there is free trade and which impose a common external tariff on imported goods from outside the market
2
Q
What factors of production between member countries are freely traded?
A
- Land
- Labour
- Capital
3
Q
What are 2 ways to resolve problems stemming from imports outside the common market?
A
- Impose a common external tariff
- Impose tariffs on re-exports (a feature of free trade areas)
4
Q
What is the goal in a common market?
A
To establish a single market in the same way that there is a single market within an individual economy.
5
Q
What changes are needed to achieve the common market’s goal?
A
- no customs posts between counties
- identical product standards between counties
- harmonisation of taxes
- a common currency
6
Q
What is trade creation?
A
The switch from purchasing products from a high-cost producer to a lower-cost producer.
7
Q
What is trade diversion?
A
The switch from purchasing products from a low-cost producer to a higher-cost producer.
