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How do consumers benefit from free trade?

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martairobert | Salutatorian

Posted February 20, 2013 at 5:28 PM via web

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How do consumers benefit from free trade?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted February 20, 2013 at 5:47 PM (Answer #1)

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As consumers, we benefit from free trade because we get the widest possible variety of goods and services at the lowest price.  We also get the best possible quality of these goods and services.

What free trade does is to open up competition to all of the countries of the world.  We know that competition is a good thing in our domestic economy.  We know, for example, that a monopoly can charge higher prices and can create things of lower quality because we have little choice but to buy from that monopoly.  The more competition there is, the harder firms have to work to get our business.  They make things as cheaply as possible while still having their quality remain high.  This is good for us, the consumers.

When free trade exists, competition comes from all over the world.  We no longer only have the best that American companies can put out.  Instead, we get the best that countries all over the world can put out.  In addition, we can benefit from countries producing things for which they have a comparative advantage. This means that the overall amount of goods and services that is produced will increase.

When free trade exists, consumers benefit.  They get a broad variety of high-quality goods at low prices.   

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