📚 Learning Guide
Benefits of Specialization and Trade
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What is one potential benefit of reducing trade barriers in an economy that specializes in certain goods?

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Choose the Best Answer

A

Increased efficiency in production

B

Higher taxes on imports

C

Limited access to foreign markets

D

Decreased competition among domestic producers

Understanding the Answer

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Answer

One potential benefit of reducing trade barriers in an economy that specializes in certain goods is that it can lead to increased efficiency and lower prices for consumers. When countries focus on producing what they are best at, they can make those goods more efficiently and in larger quantities. For example, if a country specializes in making high-quality coffee and reduces tariffs on coffee imports, it can import other goods at lower prices, which benefits consumers. This encourages trade, allowing countries to enjoy a variety of products while maximizing their strengths. In the end, everyone can get better products at lower costs, which helps the economy grow.

Detailed Explanation

When trade barriers are lowered, countries can produce goods more efficiently. Other options are incorrect because Some might think that higher taxes on imports help the economy; It's a common belief that reducing trade barriers limits access to foreign markets.

Key Concepts

trade barriers
Topic

Benefits of Specialization and Trade

Difficulty

easy level question

Cognitive Level

understand

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