Which type of producer would most likely be harmed by the implementation of free trade policies?

• A. A domestic producer that cannot compete with lower-cost foreign imports
• B. A multinational corporation with diversified global operations
• C. A domestic producer with the lowest production costs in the world
• D. A foreign producer with a comparative advantage

Answer: (A)

Verified step by step guidance

1. Understand the concept of free trade policies: Free trade policies reduce or eliminate tariffs, quotas, and other trade barriers, allowing goods and services to move more freely across borders.
2. Identify the impact of free trade on different types of producers: Producers who can produce goods at lower costs or have a comparative advantage tend to benefit from free trade, as they can access larger markets and sell more competitively.
3. Analyze the domestic producer that cannot compete with lower-cost foreign imports: This type of producer faces increased competition from imports that are cheaper due to lower production costs abroad, which can reduce their market share and profits.
4. Consider the multinational corporation with diversified global operations: Such firms often benefit from free trade because they can optimize production and sales across countries, leveraging cost advantages and market access.
5. Evaluate the domestic producer with the lowest production costs and the foreign producer with a comparative advantage: Both are likely to benefit from free trade, as they can sell more efficiently and expand their markets.