Which of the following is FALSE about intraindustry trade?
A)Economies of scale allow firms to enjoy lower average costs.
B)It creates gains from trade.
C)It is due to comparative advantage.
D)It may involve heightened competition and lower prices for consumers.
E)It increases consumer choice.

Question

Quizplus · Accepted Answer

Intraindustry trade is not necessarily due to comparative advantage. It can be due to economies of scale, product differentiation, transportation costs, and other factors. However, even if it is not due to comparative advantage, it can still create gains from trade, increase consumer choice, and result in lowered prices for consumers due to heightened competition.

Which of the Following Is FALSE About Intraindustry Trade