If two countries participate in free trade:
A) every individual in each country will benefit.
B) both countries as a whole may gain from the trade.
C) one country will benefit, but the other country will experience reduced welfare..
D) neither country will benefit.

Question

Quizplus · Accepted Answer

In free trade, both countries can specialize in producing goods and services that they are most efficient at, resulting in increased output and lower costs. This enables both countries to benefit from the trade as a whole, in terms of increased economic growth, greater consumer choice, and higher living standards. While individual sectors or groups within a country may experience short-term disruptions or changes in relative prices, over the long-term, free trade should result in overall gains for both countries.

If Two Countries Participate in Free Trade