Question

Two countries, cadmia and palladia, have formed a free trade agreement. this has resulted in cadmia importing sugar from palladia, which cadmia previously imported from another country at a lower cost. this is an example of

Answer 1

This is an example of "trade diversion".

Exchange redirection is a monetary term identified with global economic aspects in which exchange is occupied from a more productive exporter towards a less proficient one by the arrangement of free trade agreement. In a international trade circumstance, a business that can offer a lower cost item for importation into a specific nation has a tendency to make an exchange redirection far from another importer or nearby makers whose costs are higher for a comparative item.