00:01
Explain how consumers gain from intra -industry trade.
00:04
Let's define what that is.
00:15
This is defined as trade of goods between different countries within one industry.
00:36
So how do consumers benefit? so international trade combines lower average production costs and that come from economies of scale.
01:03
And at the same time, international trade allows competition between companies from different countries and also a variety of customers.
01:37
Because of course, if different countries are trading with each other, we'll have a wider customer base.
02:01
So for example, we could think about the car industry.
02:05
So if the us did not trade with other countries within the car industry, the level of competition and consumer choice is going to be considerably lower.
02:24
So if the competition between businesses is lower, then this means that prices are going to be higher for the consumer.
02:36
Because as you know, competition lowers prices.
02:48
And of course, consumers would have less choices.
02:50
They wouldn't be able to purchase foreign cars.
02:57
Greater competition overall is beneficial because it brings innovation and responsiveness to what consumers want.
03:11
So competition encourages greater responsiveness to consumers.
03:41
America's car producers are now making much better cars than they did several decades ago because of competition from abroad.
03:49
Without this competition, they may not have made these improvements.
03:53
So let's go to the second part of the question...