According to new trade theory, trade, through its impact on economies of scale, is most likely to
A) reduce the volume of the goods produced.
B) decrease the variety of goods available to consumers.
C) decrease the average costs of goods.
D) inhibit first-mover advantages in all industries.
E) benefit only nations that differ in resource endowments or technology.

Question

Quizplus · Accepted Answer

New trade theory suggests that trade can lead to economies of scale, which in turn can decrease the average costs of goods, allowing firms to produce at a larger scale and reduce costs per unit.

According to New Trade Theory, Trade, Through Its Impact on Economies