Economics · May / June 2021 · Paper 11 · Question 27
2281Specialisation and free trade
What is a disadvantage of increasing international specialisation?
- AConsumers pay higher prices for goods and services reducing their welfare.
- BDomestic firms may be uncompetitive leading to structural unemployment.
- CDomestic firms may experience rising costs as they pay more for imports.
- DResources may be used less efficiently as domestic firms face less competition.
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Correct answer: B. Domestic firms may be uncompetitive leading to structural unemployment.
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