Question

10. Benefits of free-trade agreements Suppose that Indonesian consumers previously faced higher prices on shoes than they do under the free-trade agreement to which the nation currently adheres because there were only a few domestic firms supplying shoes to the Indonesian market due to trade restrictions. Which of the following benefits of intemational trade describes this free-trade benefit that Indonesian consumers enjoy?
O Enhanced flow of ideas
O Increased competition Lower unit costs through economies of scale
O Increased variety of goods Indonesian consumers have enjoyed more consumer surplus from their shoe purchases than they did before their nation adopted an international agreement on trade restrictions.

Answer 1

Increased variety of goods Indonesian consumers have enjoyed more consumer surplus from their shoe purchases than they did before their nation adopted an international agreement on trade restrictions.

Answer: Option C.

Explanation:

Free trade is the trading and exchange of goods and services between one country and the other country. This is done without any restrictions on the borders of the country that is there is no duties, taxes and so on are to be paid for the trade.

With the increase in the free trade agreement, the variety which is available with the consumers in the market also increases satisfying their needs and wants.