Free trade vs Fair trade

Question 1

Free trade

Answer 1

Liberal international trade left to its natural course without tariffs,quotas or other restrictions

Question 2

Fair trade

Answer 2

Fair trade is a trading partnership, that seeks greater equity in international trade

Question 3

2 benefits of free trade

Answer 3

Voluntariness- fairness in free trade as people voluntarily pay what they believe worth is (market clears)
Allows comp advantage as no additional costs

Question 4

2 negatives of free trade

Answer 4

Failure to protect infant industries (maize)

Breakdown of agricultural prices due to foreign competition can lead to growing illegal crops (Afghanistan)

Question 5

2 benefits of fair trade

Answer 5

Needed for stability when nations have SXD (LEDC’s have experienced 68% increase in x concentration)
Additional profits aid investment helping firms become more competitive and births multiplier

Question 6

2 negatives of fair trade

Answer 6

Additional cost to consumers (2008 people care less)

Form of protectionism