New Trade Theory Benefits: more choice and lower prices for consumers скачать в хорошем качестве

New Trade Theory Benefits: more choice and lower prices for consumers

New Trade Theory explains why free trade is beneficial to consumers. This video gives an illustration of how this works. In our example, two mythical countries both have consumers who want to buy sports cars and vans. However, demand is only great enough for each country to produce one type of vehicle at a price that is affordable for consumers. Without free trade, customers will have no choice but to buy the type of vehicle produced in the country. However, with free trade, the country can produce one type of vehicle, vans for example, for domestic consumption and export. The other country can do the same with a different type of vehicle, for example, sports cars. Consumers now have a choice of two types of vehicle. There is an added benefit. Because the market for both vehicles has expanded, there will be greater economies of scale. This means that the vehicles will be cheaper. The producers can then either make more profit or pass on some of those savings to the consumers. In reality, it will probably be a mixture of both. Acknowledgements: Thanks to Pixabay for the illustrations. www.pixaby.com