Benefits of free trade Flashcards
1
Q
Define the term absolute advantage
A
when a country can produce that good using fewer resources
2
Q
Define the term comparative advantage
A
when one country may not have an absolute advantage in the production of either good.
3
Q
how is a larger market a benefit of free trade?
A
firms benefit from greater economies of scale by selling to a larger market, bringing lower costs.
4
Q
how is competition a benefit of free trade?
A
international trade creates greater competition for markets, such as reducing domestic monopoly power
5
Q
how is growth and living standards a benefit of free trade?
A
a link between trade and poverty reduction. Greater trade should boost incomes.
