7. Benefits of free-trade agreements Suppose that Swrist, a hypothetical Swiss c

Question

7. Benefits of free-trade agreements Suppose that Swrist, a hypothetical Swiss company that manufactures watches, exports its products to many nations and charges foreign consumers a relatively low amount for a watch. The company can do this because foreign economies' openness to free trade allows Swrist to produce watches more efficiently. Swrist can reduce production costs per watch by producing with larger factories when facing a larger market. Which of the following benefits of international trade describes this free-trade benefit that Swrist enjoys? Increased variety of goods Enhanced flow of ideas Increased competition Lower unit costs through economies of scale Swrist has been able to produce watches more efficiently and become more profitable through exporting because more than 100 nations adhere to a multilateral approach to trade restrictions that dramatically reduced average tariffs among member nations and is known as the

Explanation / Answer

Part 1 answer:

Free-trade benefit that swrist enjoys will be lower unit costs through economies of scale.

Part 2 answer:

The given statement is known as General Agreement on Tariffs and Trade (GATT)

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