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At the intermediate price shown in the diagram, (the free trade price) Japan sells exports to the UK for a higher price but this is still lower than the UK equilibrium price. Japan receives revenue from the sale of these exports.
UK consumers can now buy more camcorders at a lower price and have more choice in the market
We are ignoring transportation costs between the two countries and we are assuming that the resources that were previously allocated to producing camcorders in the UK can be reallocated to other industries (i.e. resources are assumed to be occupationally mobile).
Free trade, interchange of commodities across political frontiers without restrictions such as tariffs, quotas, or foreign exchange controls...
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