Social mobility allows for individual choice and creative thinking. Free trade occurs when a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country. Present and describe a current example.

An excellent example of unfettered free trade may be found in the current example of the European Community, where goods and services may pass unrestricted through borders. Free trade has been greatly beneficial to consumers and producers within the EU. The EU has become one of the most powerful economic entities in the world community. Consumers have a wide array of choices of the best possible goods and services from all EU nations at competitive prices in the tariff-free, quota-free environment.

Who gains and who losses from the imposition of a tariff on an imported goods? How can it be determined whether the net gain from the tariff exceeds the net loss?

Consumers...

Foreign producers lose their ability to have full access to markets abroad even while pricing their goods competitively. Domestic producers and employees in the same market as the cheaper foreign good will gain, as consumers are more likely to purchase their goods. However, some domestic producers in other industries may lose the ability to purchase more competitively-priced input goods from abroad. This drives up their own costs of production, costs they must pass on to all consumers. A trade war may also be instigated when one nation places tariffs on the goods of another nation. This can mean that all producers from the 'offending' nation are shut out of foreign markets. All of these factors must be taken into consideration when passing a tariff, particularly the affects on domestic consumers and other producers, as well as the likelihood of a trade war.