Social Science (087) — AI-generated practice question

Foreign trade allows producers to sell in markets beyond their own country and gives buyers access to goods from other countries. This causes goods to flow between markets, prices of similar goods tend to equalise, and producers from different countries compete with each other — thus integrating markets.

Example: Chinese manufacturers exported cheaper plastic toys to India. Indian buyers shifted to Chinese toys due to lower prices and new designs, replacing 70–80% of Indian toys. Prices of toys fell in India, connecting the Indian and Chinese toy markets.

Source: Foreign Trade and Integration of Markets, Chapter 4

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• The examiner expects two elements: the mechanism (goods travel, prices equalise, competition rises) and a concrete example.
• The Chinese toys example is directly from the textbook — using it is safest and earns full marks.
• Key phrase to include: "integration of markets" — write it explicitly.
• Do not write about trade barriers or liberalisation here; that is a different concept.