Trade and the UK: Disadvantages of international trade

Overview

Recall questions on Disadvantages of international trade.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   How can international trade raise living standards for households?

   Model answer

   Lower prices and greater variety of goods increase real incomes and consumer welfare, raising living standards.

2. 2

   How does international trade benefit firms through access to larger markets?

   Model answer

   Firms can sell to consumers abroad, increasing potential sales and revenue beyond the domestic market.

3. 3

   How do cheaper imported inputs benefit firms engaged in international trade?

   Model answer

   Firms can source raw materials and components from lower-cost foreign suppliers, reducing production costs.

4. 4

   How does increased competition from international trade drive innovation for firms?

   Model answer

   Exposure to foreign competitors forces firms to innovate and improve products to remain competitive.

5. 5

   How can international trade increase tax revenues for government?

   Model answer

   Economic growth resulting from trade expands the tax base, generating higher revenues from income, corporation, and consumption taxes.

6. 6

   How might international trade improve diplomatic relations for a government?

   Model answer

   Trade creates economic interdependence between nations, fostering cooperation and stronger diplomatic ties.

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