The correct option is 2 only.
Explanation
Foreign trade serves as a mechanism that connects the markets of different countries. It allows for the exchange of goods and services across borders, fundamentally altering market dynamics regarding price, choice, and competition.
Statement-wise Analysis:
- Statement 1 is Incorrect: Foreign trade results in the integration of markets, not their fragmentation. By facilitating the movement of goods from one country to another, it connects domestic markets with the global economy.
- Statement 2 is Correct: As trade opens up and markets integrate, goods travel from markets of lower price to markets of higher price until equilibrium is reached. Consequently, the prices of similar goods in two different markets tend to become equal (a concept related to the Law of One Price).
- Statement 3 is Incorrect: Foreign trade expands the choice of goods available to consumers. It enables consumers to access products manufactured in other countries, thereby offering a variety of choices beyond what is produced domestically.
Key Takeaway:
Foreign trade leads to the integration of markets across countries, resulting in increased competition, the expansion of consumer choices, and the equalization of prices for similar goods in different markets.