Question：A __________ establishes a free trade area between member states, and also erects common external tariffs to charge on imports from non-member countries.

　　What is the missing phrase?

　　A. Common Market

　　B. Preferential Trade Area

　　C. Customs Union

　　D. Free Trade Area

　　The correct answer is: Customs Union.

　　A Customs Union promotes free trade among member states while acting as a protectionist bloc against non-member states.

　　Question：In some cases, society can gain by restricting imports up to the point at which the benefit of the last import equals its cost to society as a whole. A tariff set to achieve this result is called:

　　A. A deflationary tariff

　　B. A welfare tariff

　　C. A marginal tariff

　　D. An optimal tariff

　　The correct answer is: An optimal tariff.

　　The optimal tariff argument provides a demonstration of the possibility of gains in welfare from a tariff.