Final answer:
A trade discount is a reduction in price offered to wholesalers or retailers who purchase in bulk, which encourages larger orders and business-to-business sales. Governments can encourage or discourage trade through the imposition or reduction of tariffs and trade barriers. Such policies can affect the level of trade and economic outcomes, including enabling small economies to achieve economies of scale. Option C.
Step-by-step explanation:
A trade discount is a reduction in the listed price of a product or service, offered by sellers to buyers who are in the business of either reselling those products or using them as components in the production of their own goods.
This discount is generally provided to wholesalers or retailers who purchase in large quantities, hence the correct answer to the student's question is C) A discount offered to wholesalers or retailers for purchasing in bulk.
Governments can either encourage or discourage trade through various mechanisms. To encourage trade, governments can reduce trade barriers or eliminate tariffs.
Conversely, to protect domestic industries or influence the balance of trade, they might implement or increase tariffs and enforce trade barriers.
Over time, these actions can lead to a higher level of trade or a greater imbalance of trade, depending on the specific policy approach.
International trade enables small economies to benefit from economies of scale by expanding their markets beyond domestic borders.
It allows them to specialize in producing certain goods more efficiently, leveraging their comparative advantage, and they also benefit from the availability of a wider range of products and increased competition, which can lead to better prices and quality for consumers.
Hence, the right answer is option C.