Multiple choice

Which of the following assumptions is not related to Vanek's theory of Customs Union?

  1. There are two countries called home country and partner country, which form the customs union.

  2. Neither commodity is inferior in any country at any relative price or income level.

  3. Both countries trade with each other after the formation of the customs union.

  4. No tariff or obstacle to trade exists.

  5. There is free trade.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

This theory does not state that both countries trade with each other after the formation of the customs union. His assumption is based on the fact that both countries trade with each other before the formation of the customs union.

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