In addition to the positive welfare effects that free trade has on an economy, t

Question

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:

As a consumer, Yvette loves both French beers and Italian beers. Thanks to free trade, she has the option of purchasing either at her local store. The previous scenario represents which of the following benefits of free trade?

A.Lower costs through economies of scale

B. Enhanced flow of ideas

C. Increased competition

D. Increased variety of goods

Explanation / Answer

Option (D).

This situation represents the benefit of increased variety of goods, since different varieties of the same good (beer) is available to the consumer as result of trade.

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