Since joining NAFTA in the early 1990s,Canada has experienced increases in productivity and output in many export- oriented industries because of economies of scale and learning by doing.In these industries,these gains from trade will lead to

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Quizplus · Accepted Answer

The gains from trade, specifically economies of scale and learning by doing, will lead to a downward shift in the long-run average cost (LRAC) curve as well as a downward movement (to the right) along the LRAC curve. This is because as firms produce more output, their average cost of production decreases due to the fixed costs being spread over a larger output. Additionally, the firms become more efficient in production techniques and can produce output at a lower cost. This results in a shift and movement along the LRAC curve. The short-run average cost (SRAC) curve may also shift downward, but it is not mentioned in the given information.

Since Joining NAFTA in the Early 1990s,Canada Has Experienced Increases