Free Trade Essays
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The second principle of how people make decisions is by realizing that the cost of something is what you give up to get it. Due to the fact that people generally face trade-offs, decision making requires comparing the costs and benefits analysis of other alternative courses of action. When making decision you must have an opportunity cost which is what you give up to obtain something else.
The third principle of how people make decisions is that rational people think at the margin. Individuals and firms can make better decisions by thinking at the margin and by comparing the marginal benefits with the associated marginal costs of a decision. “A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost” (Principles of microeconomics).
The fourth and final principle is that people respond to incentives. An incentive is something that induces a person to act and because rational people make decisions by comparing costs and benefits, they respond to incentives.
Free trade is one of the few trades that is considered as a fair trade because it gives consumers the option to choice the best