Question

1. free trade benefits

in addition to the positive welfare effects that free trade has on an economy, there are a variety of other benefits of international trade. consider the
following scenario:
without free trade, rooby has market power as a local producer. once free trade is implemented in the local economy, rooby is no
longer able to raise its prices above competitive levels.
the previous scenario represents which of the following benefits of free trade?
increased competition
increased variety of goods
lower costs through economies of scale
an enhanced flow of ideas

Explanation:

Free trade leads to increased competition as domestic producers face international rivals. This competition can drive efficiency, innovation, and better resource allocation. Economies of scale (lower costs due to larger production volumes) are more about production scale rather than direct competition effects. An enhanced flow of ideas is more related to cultural and knowledge exchange aspects. Increased variety of goods is about consumer choice from imports. The key here is that competition intensifies with free trade as local producers now have to compete globally.

Answer:

Increased competition