Answer: It may exacerbate income inequality.

**Explanation:** - **Option A (Correct):** Opponents of free trade argue that it can lead to greater income inequality and job losses in developed countries due to increased import competition. This aligns with concerns about the distributional effects of trade. - **Option B (Incorrect):** Free trade often allows firms to achieve economies of scale, reducing average production costs as they access larger markets. This contradicts the claim that trade increases production costs. - **Option C (Incorrect):** Trade facilitates the exchange of ideas, technical expertise, and awareness of global consumer preferences. Studies, such as Coe and Helpman (1995), demonstrate that foreign R&D positively impacts domestic productivity, especially in more open economies.

Author: LeetQuiz Editorial Team