Final answer:
Both small businesses and nations can maximize profits in international trade by reducing production costs, which enhances competitiveness and allows for lower pricing or higher profit margins. International trade offers economies of scale and drives quality and efficiency through competition. Protectionist measures, on the other hand, can reduce competition and lead to negative outcomes such as corruption and reduced production.
Step-by-step explanation:
To maximize profits in international trade, both small businesses and nations may adopt similar strategies. One effective strategy is (b) By reducing production costs. This can be done by streamlining production processes, adopting new technologies, outsourcing certain operations where it's more cost-effective, or finding ways to economize on materials and overhead costs. Reducing production costs can help a business or nation become more competitive on the international stage, as it allows for lower pricing or higher profit margins.
Engaging in international trade allows small economies to benefit from economies of scale, where the cost per unit decreases as production scales up, which is difficult to achieve in a limited domestic market. Moreover, international competition and a variety of producers contribute to keeping quality high and prices competitive, which benefits consumers and can enhance the reputation of a business or nation as a reliable supplier. This environment fosters innovation and efficiency, ultimately benefiting the broader economy.
However, the use of protectionist measures such as high tariffs and complex permit systems can reduce competition and lead to corruption, negatively impacting the quality and production levels. In the long run, consumers benefit from better and less expensive products due to free trade, which supports businesses that are able to compete effectively and their employees. International agreements can mitigate the influence of domestic special interests and encourage trade by lowering barriers.