Chapter 18.3, Problem 5R

To determine

To explain the significance of free trade and how trade from U.S. may lead to cheaper or expensive products.

Explanation of Solution

Free trade refers to a situation where trade between countries is not bounded by any qualitative or quantitative restrictions.

List of items made in different parts of world that people uses in day to day life.

Products	Country of Origin
O-Phone	U.S.A
Gaming Laptop	Taiwan
Toys	China
Holkwagon Car	Germany
Cleaning Robot	Japan

As abovementioned items have been imported from the nation which has absolute cost advantage in producing them, hence it will be cheaper for every country to import them rather than produce them in their home country.

However if Gaming Laptop, Toys, car, cleaning robot have been imported from U.S., then these items will be more expensive due to heavy tariff duties imposed by U.S. government and also other countries have comparative cost advantage of producing these commodities.