What role does competition play in international trade?

A. It results in higher prices.

B. It discourages imports.

C. It drives down prices for consumers.

D. It does away with the need for investment.

Answer

To answer the question about the role of competition in international trade, let's evaluate each of the provided options one by one.

Options:

Step 1: Analyze each option.

Option A: It results in higher prices.

Competition typically leads to lower prices as businesses strive to attract consumers. If there is competition in international trade, suppliers have to reduce prices to gain market share. Therefore, this option is generally not true.

Option B: It discourages imports.

Competition can actually encourage imports as countries seek the best products at the lowest prices. Not only can competition come from domestic producers, but international competitors can also create a dynamic market for consumers. Thus, this option is also not accurate.

Option C: It drives down prices for consumers.

This option aligns well with economic theory. Increased competition among companies, including those from different countries in international trade, often results in lower prices for consumers as businesses compete to offer better prices. This is a strong candidate.

Option D: It does away with the need for investment.

Competition generally requires businesses to invest in efficiency, technology, and innovation to stay competitive. Therefore, this statement is misleading, as competition often encourages investment rather than eliminating it.

Step 2: Conclusion. After analyzing each option, the best answer is:

C. It drives down prices for consumers.

This reflects the positive impact that competition in international trade has on pricing and consumer access to goods and services.