Multiple Choice
Which of the following are commonly cited impediments to establishing economic integration between countries?
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9. International Trade
Arguments Against International Trade
Multiple Choice
Which of the following are two potential drawbacks of government intervention in free trade?
A
It can lead to inefficiency and higher prices for consumers.
B
It guarantees technological advancement and innovation.
C
It always increases market competition and lowers costs.
D
It eliminates the risk of retaliation from other countries.
Verified step by step guidance1
Step 1: Understand the context of government intervention in free trade, which typically involves policies like tariffs, quotas, or subsidies aimed at protecting domestic industries.
Step 2: Recognize that government intervention can distort market outcomes by preventing the free flow of goods and services, which may lead to inefficiency in resource allocation.
Step 3: Analyze how these distortions can cause higher prices for consumers because protectionist measures often reduce competition and increase production costs.
Step 4: Evaluate the incorrect options by considering economic principles: government intervention does not guarantee technological advancement or innovation, nor does it always increase competition or lower costs.
Step 5: Also note that intervention can provoke retaliation from other countries, so it does not eliminate that risk.
