Unit 4 Economics IB

Free Trade

Benefits of Free Trade

Increased Competition[lower prices, more choices], Access to Resources[efficient production, efficient resource allocation], Economies of Scale, Access to Foreign Currency

Arguments for Trade Protection(9)

Protect Infant Industries, Maintenance of Health and Safety, National Security, Environmental Standards, Anti Dumping, Unfair Competition(intellectual property), Balance of Payments, Government Revenue, Protection of Jobs

Arguments Against Free Trade(5)

Misallocation of Resources, Retaliation(Trade War), Increased Cost/Higher Prices, Less Choice, Lack of Incentive for Competition

Tariff Stakeholders

Domestic Producer: gain consumers, increased revenue

Foreign Producers: Loose consumers, losing revenue

Consumers: Pay higher prices for lower quantity

Government: Gain revenue

Quota Stakeholders

Domestic Producer: Able to sell at higher prices as quantity increases

Foreign Producers: Lose volume of exports but sell at greater price

Consumers: Pay higher prices