Author Question: If a scale economy is the dominant technological factor defining or establishing comparative ... (Read 89 times)

yoroshambo · **on:** Jun 30, 2018

If a scale economy is the dominant technological factor defining or establishing comparative advantage, then the underlying facts explaining why a particular country dominates world markets in some product may be pure chance, or historical accident.

Explain, and compare this with the answer you would give for the Heckscher-Ohlin model of comparative advantage.

Question 2

The WTO encourages nations to take unilateral action on trade issues, including issues involving environmental protection.

Indicate whether the statement is true or false

Liddy · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

This statement is true, since the reason the seller is a monopolist may be that it happened to have been the first to produce this product in this country. It may have no connection to any supply or demand related factors; nor to any natural or man-made availability. This is all exactly the opposite of the Heckscher-Ohlin Neo-Classical model's explanation of the determinants of comparative advantage.

Answer to Question 2

FALSE