Author Question: Does the presence in the real world of intraindustry trade prove or disprove the classical or ... (Read 72 times)

imowrer · **on:** Jun 30, 2018

Does the presence in the real world of intraindustry trade prove or disprove the classical or Heckscher-Ohlin models? Explain.

What will be an ideal response?

Question 2

What matters most to importers and exporters is the nominal exchange rate.

Indicate whether the statement is true or false

Anna · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

It does not disprove these theories, but it does present difficulties. Clearly, both theories would seem to imply that trade should be interindustry. Some intraindustry trade can be explained by transport costs or by data classification problems. The intraindustry trade that remains suggests the need for broader theories that incorporate such factors as increasing returns to scale and goods that are imperfect substitutes.

Answer to Question 2

FALSE