The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is PW.Assume that all jeans are identical.
FIGURE 34- 2
-Consider the following statement: "Without a doubt,free trade improves the lives of every Canadian citizen." This statement is _ because .

Question

The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is PW.Assume that all jeans are identical.
  FIGURE 34- 2
-Consider the following statement: "Without a doubt,free trade improves the lives of every Canadian citizen." This statement is _ because .

Quizplus · Accepted Answer

The statement is incorrect because while free trade may bring overall benefits to a country, there are winners and losers in the process. In this specific case, if Canada were to open up to free trade, the domestic denim industry may suffer as they may not be able to compete with cheaper imported jeans, leading to possible job losses and economic hardship for those directly affected. However, consumers would benefit from the lower prices of imported jeans. Therefore, while free trade may lead to overall gains for a country, it is important to acknowledge the distributional effects and potential winners and losers.

The Diagram Below Shows the Domestic Demand and Supply Curves