NES Business Studies Practice Test – Complete Exam Prep 2025

The benefit that advocates of free trade claim results from eliminating trade barriers is the concentration on comparative advantage. When trade barriers such as tariffs and quotas are removed, countries can specialize in the production of goods and services for which they have a relative efficiency or lower opportunity cost. This specialization allows nations to produce more of what they are best at, leading to an increase in overall economic efficiency and productivity. As a result, consumers benefit from a greater variety of goods at lower prices, and the global economy can grow as resources are allocated more effectively across borders.

By concentrating on comparative advantage, each participating country can trade its specialized goods for those produced by others, maximizing the benefits of trade. This principle underlies the economic theory that when countries trade freely, they can all gain from the exchange, leading to mutual benefits and improving standards of living globally.