CA Foundation · Business Economics · International Trade
Which of the following is a commonly accepted argument in favour of free trade?
Free trade lets resources shift to their most efficient uses through specialisation, and it gives consumers wider choice at lower prices because of competition. Protecting jobs, reducing dependence and earning tariff revenue are arguments for protection, not free trade.
- AIt shields domestic employment from foreign competition in all industries
- BIt allows resources to move to their most efficient uses and widens consumer choice at lower pricesCorrect
- CIt reduces a country's dependence on other nations for essential goods
- DIt allows a government to earn revenue from import duties
Explanation
Free trade promotes specialisation by comparative advantage, raising efficiency and offering consumers more variety at lower prices. The other options are arguments for protection, such as job protection, self-sufficiency and tariff revenue.
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