Positive welfare effects that free trade

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Free-trade benefits

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, Diamonique has market power as a local producer. Once free trade is implemented in the local economy, Diamonique is no longer able to raise its prices above competitive levels.

The previous scenario represents which of the following benefits of free trade?

A) Enhanced flow of ideas

B) Lower costs through economies of scale

C) Increased variety of goods

D) Increased competition

Reference no: EM13743752

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