After Canada joined NAFTA in the early 1990s,Canada experienced increases in productivity and output in many export-oriented industries because of economies of scale and learning by doing.In these industries,theory tells us that the gains from trade led to

Question

Quizplus · Accepted Answer

The gains from trade, resulting from the increase in productivity and output in many export-oriented industries due to economies of scale and learning by doing after Canada joined NAFTA, led to downward shifts of the LRAC curves and downward movements (to the right) along the LRAC curves. This is because as firms experience these productivity gains, their long-run average costs decrease, resulting in a shift of the LRAC curve. As they continue to produce more, their short-run average costs also decrease, resulting in a downward movement along the LRAC curve. Therefore, choice D is the best answer.

After Canada Joined NAFTA in the Early 1990s,Canada Experienced Increases