Author Question: Product differentiation and internal economies of scale yield gains from trade in the form of A) ... (Read 33 times)

Garrulous · **on:** Jun 30, 2018

Product differentiation and internal economies of scale yield gains from trade in the form of

A) lower production costs and a greater variety of goods.
B) higher profits and lower trade costs.
C) the proximity-concentration effect.
D) a proliferation of competitive firms.
E) the substitution of immigration for foreign direct investment.

Question 2

The Ricardian two-country two-good model predicts that there are potential benefits from trade, but NOT

A) the effect of trade on income distribution.
B) the mechanism that determines which country will specialize in which good.
C) when one country has an absolute advantage in the production of both goods.
D) when one country has significantly lower wages than the other country.
E) when both countries have the same types of technology available.