Evaluate the impacts of opening foreign trade on the global economy by identifying the appropriate statements among the following options:
i. The choice of goods in the markets increase.
ii. Producers from two countries closely compete against each other despite the distance between their locations.
iii. Foreign trade thus results in connecting the markets or integration of markets in different countries.
iv. The quality of the product is always good.
a. Statements i and ii are appropriate.
b. Statements i, ii and iii are appropriate.
c. All the statements are appropriate.
d. Only statement iv is appropriate.
Answer by Student
The correct answer is (b) Statements i, ii and iii are appropriate.
Detailed Explanation by Teachoo
Let’s check all the options:
Statement i: The choice of goods in the markets increase.
Foreign trade expands the range and variety of goods and services available in the domestic market by allowing imports from other countries. Foreign trade also enables domestic producers to export their products to other countries and earn foreign exchange. Thus, foreign trade enhances the choice of goods for consumers and producers.
This statement is
Statement ii: Producers from two countries closely compete against each other despite the distance between their locations.
Foreign trade exposes domestic producers to international competition and forces them to improve their quality, efficiency and innovation. Foreign trade also creates opportunities for domestic producers to enter new markets and expand their customer base. Thus, foreign trade increases the competition and cooperation among producers from different countries.
Statement iii: Foreign trade thus results in connecting the markets or integration of markets in different countries.
Foreign trade allows the exchange of goods and services across national boundaries, which creates interdependence and linkages among different countries. Foreign trade also reduces the barriers and differences among markets by creating common standards, rules and regulations for trade. Thus, foreign trade leads to market integration or globalization of markets.
- Statement iv: The quality of the product is always good. Foreign trade does not guarantee the quality of the product. Foreign trade may involve low-quality or substandard products that may harm the consumers or the environment. Foreign trade may also involve unfair or unethical practices such as dumping, subsidies, tariffs or quotas that may distort the quality or price of the product. Thus, foreign trade does not always ensure the good quality of the product. This statement is not appropriate .❌
Thus, option (b) is correct because it includes all the statements that are appropriate and excludes the statement that is not appropriate.