MINDTAP Q Search this course Kirs Homework (Ch 09) e Back to Attempts: Keep the

Question

MINDTAP Q Search this course Kirs Homework (Ch 09) e Back to Attempts: Keep the Highest: 11 5. Free trade benelits In addition to the positive welfare effects that free trade has on an economy, there are a variety of other benefits of international trade. Consider the following scenario: Without free trade, Sapphira has market power as a local producer. Once free trade is implemented in the local econormy, Sapphira is no longer able to raise its prices above competitive levels The previous scenario represents which of the following benefits of free trade? O Lower costs through economies of scale An-hanced flow of ideas O Increased variety of goods O Increased competition Grade iR Now &Contini

Explanation / Answer

ANSWER:

1) INCREASED COMPETITION AS COMPETITION WILL INCREASE AFTER TRADE IS OPENED FOR COMPANIES BEYOND THE COUNTRY.

2) USING PROTECTION AS A BARGAINING CHIP ARGUMENT AND THE REASON IS IT SATISFIES THE DEFINITION OF THIS ARGUMENT.

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