What are the possible advantages of free trade, Microeconomics

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What are the possible advantages of free trade?

Firms

a)  Specialisation and enhanced use of comparative advantage

b)  Possibility of advantages of scale

c)  Spread and knowledge of technology - production gains

d)  Spread of skills and labour capital

e)  Access to new/wider markets

  • consumers

a) Increased choice, i.e. variety

b) lower prices

c) overall consumer welfare (consumer surplus - outside of syllabus) in lower prices and increased consumption

d) Increase in standard of living

 


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