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:

Because of international trade, poorer countries are able to learn about technological advances made by other countries rather than investing scarce resources in developing advanced technology themselves.

The previous scenario represents which of the following benefits of free trade?

a. Increased competition

b. Lower costs through economies of scale

c. An enhanced flow of ideas

d. Increased variety of goods

c. An enhanced flow of ideas

Explanation:

Enhanced flow of ideas often lead to innovation, which would eventually lead to various creations that increase the production efficiency.

When conducting free trades, people from less-industrialized country can learn from conducting business with people from a more industrialized country. For example, they can learn the type of machines used for production, the marketing method that is used to reach customers, the most efficient way to distribute your product, etc.

After learning all this, the people form less industrialized nation could implement the knowledge in the home country. This is one way they can improve their economy and strengthen their position in on the international level.