Free trade chart

As before the country was producing 9 tons of apple and selling them at 3.50€ a kilo, yet, as consumers would always like more, and the World price is only at 2.00€. The domestic production is cut down by 3tons so they would sell at the price of 2€ like the world price. Yet at that point more people want to buy apples. As we decreased the domestic production to only 6tons, yet at the given price people want to buy 12tons, we have to import the remaining 6 tons.

Advantages that come with free trade

• Increased production: Free trade enables countries to specialise in the production of those commodities in which they have a comparative advantage, resulting in lower average costs and increased productivity. More so increased competition promotes innovative production methods, and ensures goods and services, as well as inputs, are supplied at the lowest prices. 

• Production efficiencies: Free trade improves the efficiency of resource allocation. The more efficient use of resources leads to higher productivity and increasing total domestic output of goods and services.

• Benefits to consumers: Consumers benefit in the domestic economy as they can now obtain a greater variety of goods and services. As well as the goods can be bought at the lowest prices possible

• Foreign exchange gains: When countries trade, they pay with their own currency and this money is then used by the supplier country to pay for things they import form other countries.

• Economic growth: The countries involved in free trade experience rising living standards, increased real incomes and higher rates of economic growth. This is created by more competitive industries, increased productivity, efficiency and production levels.

• Employment: Employment will increase in exporting industries. 

Disadvantages of free trade

•  Short term structural unemployment: This can impact upon large numbers of workers, their families and local economies. Often it can be difficult for these workers to find employment in growth industries and government assistance is necessary.

• Increased domestic economic instability from international trade cycles, as economies become dependent on global markets: businesses, employees and consumers are more vulnerable to downturns in the economies of our trading partners.

• International markets are not a level playing field: Countries with surplus products may dump them on world markets at below cost. Some efficient industries may find it difficult to compete for long periods under such conditions. Further, countries whose economies are largely agricultural face unfavourable terms of trade ;ratio of export prices to import prices. 

• Developing or new industries may find it difficult to become established in a competitive environment with no short-term protection policies by governments, according to the infant industries argument, it's difficult for them to develop economies of scale.

• Free trade can lead to pollution and other environmental problems as companies fail to include these costs in the price of goods in trying to compete with companies operating under weaker environmental legislation in some countries.

• Pressure to increase protection: the impact of falling employment means that protection pressures start to rise in many countries.

http://www.hsc.csu.edu.au/economics/global_economy/tut7/Tutorial7.html

Student workpoint 21.2

BS emission standards in India

Only BS-IV compliant vehicles will be sold and registered from 2017: Government

http://economictimes.indiatimes.com/industry/auto/news/industry/only-bs-iv-compliant-vehicles-will-be-sold-and-registered-from-2017-government/articleshow/48544844.cms

"NEW DELHI: Sale of four-wheelers not meeting Bharat Stage (BS)-IV emission norms will be barred in India from April 2017, with the government deciding to bring the entire country under the ambit of the tighter pollution control standard."
"The sale and registration of vehicles not meeting the new emission norms won't be allowed in the country from April 2017 and only Bharat Stage compliant four-wheeler vehicles will be manufactured," said a transport ministry spokesperson. 

"From April 1, 2017, the mass emission standards for Bharat Stage IV shall come into force all over the country," the road transport & highways ministry said in a statement. "With this, only those newly manufactured four-wheeler vehicles, which are compliant with the BS-IV standards, will be allowed to register and move on roads with effect from the notified dates in the notified areas."
The new norms will reduce emissions of carbon monoxide (CO),hydrocarbon (HC), oxides of nitrogen (NOx) and sulphur (SOx), which are much less in BS-IV fuel compared to BS-III fuel. 

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India is a country that has a huge population and is known for their abundance of cars and low pollution standards. As most of the population is rather poor people choose to go for the older and cheaper vehicles which pollute more. 

With banning the sales and registration of four-wheelers that do not meet the Bharat Stage IV emission norms the government is limiting the negative externalities that come with using older cars. As well as they will be helping the car sellers in India to have more business. People won't be able to buy old cars from each other any more. This decision will be good news to car manufacturers, yet for people in India it means that more saving up will probably have to be done to buy car that meet the standards. This decision of applying the new emission standards might actually decrease the level of cars in the country overall, as people now becoming old enough to drive a car, might not have enough available funds to buy a newly manufactured car that meets the standards. 

Higher priced cars with higher standards also means more money will be going to big companies that pay taxes. And more taxes means more money for the government to improve the country even further.

Yet most importantly the constant pollution rate will be decreased which therefore will raise the living qualities and possibly make India more attractive to tourists, which in return can bring in even more money in long term.