5. 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, Sapphira has market power as a local producer. Once free trade is implemented in the local economy, Sapphira is no longer able to raise its prices above competitive levels. The previous scenario represents which of the following benefits of free trade? An enhanced flow of ideas Increased competition Increased variety of goods O Lower costs through economies of scale

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5. 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, Sapphira has market power as a local producer. Once free trade is implemented in the local economy, Sapphira is no
longer able to raise its prices above competitive levels.
The previous scenario represents which of the following benefits of free trade?
O An enhanced flow of ideas
O Increased competition
O Increased variety of goods
O Lower costs through economies of scale
Transcribed Image Text:5. 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, Sapphira has market power as a local producer. Once free trade is implemented in the local economy, Sapphira is no longer able to raise its prices above competitive levels. The previous scenario represents which of the following benefits of free trade? O An enhanced flow of ideas O Increased competition O Increased variety of goods O Lower costs through economies of scale
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