Countries that engage in international trade benefit from exchange and specialization. Which of the following is not a benefit of a country engaging in international trade?
- Trade enables a country to receive a higher price for its exports.
- Trade increases the power of domestic monopoly firms.
- Trade enables lower prices on imports relative to some domestically produced goods.
Answer: B
Increased foreign competition reduces the monopoly power of domestic firms and forces them to become more efficient. efficeint? is’nt that a benefit
I think C is correct, lower prices could allow domestic companies to go out of business as they cannot compete efficiently against international companies. What are your thoughts?
This means that if foreign firms enter the market, the power of domestic firms will be reduced so this is NOT a benefit.