The primary gain from international trade is:
A increased employment in the domestic export sector
B increased employment in the domestic import sector
C tariff revenue
D more goods than would be attainable through domestic production alone
The correct answer and explanation is :
The correct answer is D: more goods than would be attainable through domestic production alone.
Explanation:
International trade enables countries to obtain goods and services that they may not be able to produce efficiently or cost-effectively on their own. The primary benefit of international trade is the ability to consume a wider variety of goods and services than what a country could produce on its own. This benefit stems from the principle of comparative advantage, which suggests that countries should specialize in producing goods and services they can produce most efficiently, while trading for goods and services that would be more costly or inefficient for them to produce domestically.
By engaging in trade, countries can acquire goods at lower costs than if they tried to produce them domestically. For instance, a country with a high cost of labor may find it cheaper to import goods that require intensive labor from countries where labor is more affordable. This allows domestic consumers to access a greater quantity and variety of goods at lower prices, improving their standard of living.
Trade also allows for increased specialization in domestic industries. For example, if a country is highly efficient in producing machinery but not agricultural products, it can focus its resources on manufacturing machinery and trade with other countries for food. In this way, international trade expands the overall production possibilities for all countries involved.
While employment in the domestic export sector (A) may increase as a result of trade, it is not the primary benefit of international trade. Similarly, tariff revenue (C) and increased employment in the domestic import sector (B) are by-products of trade but are not the central gain. The core advantage remains in the diversification of goods and services available to consumers and the efficiency gains from specialization.