Differentiate between specialisation and choice as arguments in favour of free trade
Differentiate between an absolute advantage in producing some good and a comparative advantage. Specialization and the Gains from Trade. the potential benefits from free trade are large. For this reason, most economists are strongly in favor of opening markets and extending international trade throughout the world. Critics of free trade argue that with increased specialisation there will be intense competition to cut costs and therefore wages will have to fall. However, this point is not necessarily true because firms can compete by producing capital-intensive goods with better technology. Trade protectionism Trade protection is the deliberate attempt to limit imports or promote exports by putting up barriers to trade. Despite the arguments in favour of free trade and increasing trade openness, protectionism is still widely practiced. The motives for protection The main arguments for protection are: Protect sunrise industries Barriers to trade