In addition to the positive welfare effects that free trade has on an economy, there are a variety of other benefits of international trade. Consider the following scenario:
Without free trade, Sapphira has market power as a local producer. Once free trade is implemented in the local economy, Sapphira is no longer able to raise its prices above competitive levels. Answer choices shown below
1. Increased competition
2. Increased variety of goods
3. Lower costs through economies of scale
4. Enhanced flow of ideas