Chapter 2: Free Trade and Protection

Question 1

Gain From Trade

Answer 1

• Efficient Allocation of Resources
• Wider Consumer Choice
• Economic Growth
• Economies of Scale
• Prevent Monopolisation

Question 2

For Trade Liberalisation

Against Protection

Answer 2

• Efficient Allocation of Resources
• Increase Incentives to Innovate
• Low inflationary Pressure
• Benefit to Developing Economies
• Increase Employment Rate

Question 3

Against Trade Liberalisation

For Protection

Answer 3

• Unemployment
• Protect Infant Industries
• Specialisation Issues
• Dumping Issues
• Trade Deficit