Suppose that, with free trade, the world price of the product is $15. The value of consumer surplus will be $697.50
<h3>What is Free Trade?</h3>
Governments impose no tariffs, taxes, or duties on imports or export quotas under free trade. In this sense, free trade is the polar opposite of protectionism, a defensive trade policy aimed at preventing foreign competition.
In practice, governments with generally free-trade policies still impose some controls on imports and exports.
Most industrialized nations, including the United States, negotiate "free trade agreements," or FTAs, with other countries that determine the tariffs, duties, and subsidies that countries can impose on their imports and exports.
Local trade gets the right to see the cutting-edge technologies developed by multinational partners, as well as human expertise.
The aim of business is to maximize profits, whereas the goal of government is to protect its citizens.
Neither unrestricted free trade nor total protectionism can achieve both goals. The best solution has evolved from a combination of the two, as implemented by multinational free trade agreements.
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