occurs when lower - cost external suppliers are replaced by higher - cost suppliers within the free trade…

occurs when lower - cost external suppliers are replaced by higher - cost suppliers within the free trade area.\n\n a. trade diversification\n b. trade diversion\n c. trade qualification\n d. trade synergy\n e. trade creation

occurs when lower - cost external suppliers are replaced by higher - cost suppliers within the free trade area.\n\n a. trade diversification\n b. trade diversion\n c. trade qualification\n d. trade synergy\n e. trade creation

Answer

Brief Explanations:

Trade diversion happens when lower - cost external suppliers are replaced by higher - cost suppliers within a free trade area due to the preferential trade arrangements within the area. Trade diversification is about spreading trade across different products or markets. Trade qualification is not a relevant term here. Trade synergy refers to combined benefits from trade. Trade creation is the increase in trade due to the formation of a free trade area, not the replacement of suppliers as described.

Answer:

B. Trade diversion