Which of the following best describes the influence of globalization on domestic markets?

• A. Globalization eliminates the need for specialization in production.
• B. Globalization leads to higher barriers to trade between countries.
• C. Globalization reduces the variety of goods available to consumers.
• D. Globalization increases competition by allowing foreign firms to enter domestic markets.

Answer: (D)

Verified step by step guidance

1. Understand the concept of globalization: it refers to the increasing integration and interdependence of world economies through trade, investment, and technology.
2. Recall that globalization typically lowers trade barriers, such as tariffs and quotas, rather than increasing them, which facilitates the flow of goods and services across borders.
3. Recognize that globalization encourages specialization in production by allowing countries to focus on producing goods where they have a comparative advantage.
4. Consider the effect of globalization on consumer choice: it generally increases the variety of goods available by introducing foreign products into domestic markets.
5. Conclude that globalization increases competition in domestic markets by allowing foreign firms to enter, which can lead to more choices and better prices for consumers.