Free Trade

Gap-fill exercise

Fill in all the gaps, then press "Check" to check your answers. You have 10 minutes to complete this exercise.
   comparative      competition      consumer      economies of scale      employed      foreign      imports      infant      opportunity      specialisation      structural   
International trade brings a number of valuable benefits to a country, including:

The exploitation of a country's advantage, which means that trade encourages a country to specialise in producing only those goods and services which it can produce more effectively and efficiently, and at the lowest cost.
Producing a narrow range of goods and services for the domestic and export market means that a country can produce in at higher volumes, which provides further cost benefits in terms of .
Trade increases and lowers world prices, which provides benefits to consumers by raising the purchasing power of their own income, and leads a rise in surplus.
Trade also breaks down domestic monopolies, which face competition from more efficient firms.
Trade is also likely to increase employment, given that employment is closely related to production. Trade means that more will be in the export sector and, through the multiplier process, more jobs will be created across the whole economy.

However, despite the benefits, trade can also bring some disadvantages, including:

Trade can lead to over-, with workers at risk of losing their jobs should world demand fall or when goods for domestic consumption can be produced more cheaply abroad. Jobs lost through such changes cause severe unemployment.
Certain industries do not get a chance to grow because they face competition from more established foreign firms, such as new industries which may find it difficult to establish themselves.
Local producers, who may supply a unique product tailored to meet the needs of the domestic market, may suffer because cheaper may destroy their market.