The gains from trade
A)are likely realized in the long run when workers and firms have had the time to adjust to the new competitive environment.
B)are immediately realized in the short run, when governments drop protectionist policies.
C)are smaller than the costs of adjustment.
D)none of the above

Question

Quizplus · Accepted Answer

The gains from trade are likely realized in the long run when workers and firms have had the time to adjust to the new competitive environment. This is because in the short run, there may be some costs and disruptions associated with the adjustment to increased competition, but over time the increased efficiency, greater competitiveness, and access to larger markets lead to increased profits and economic growth, which benefits both firms and consumers. Therefore, the long-term gains from trade are often higher than the short-term costs of adjustment.

The Gains from Trade