Which of the following is true?
A) Competition from abroad fails to provide domestic producers with a strong incentive to improve the quality of their products and keep their costs low.
B) When economies of scale are important in an industry, international trade benefits domestic consumers but harms domestic producers.
C) When economies of scale are important in an industry, international trade will be particularly important for domestic producers operating in small countries.
D) Economies of scale eliminate the potential gains from international trade.

Question

Quizplus · Accepted Answer

When economies of scale are important, international trade allows domestic producers in small countries to access larger markets, thus benefiting from increased production and reduced costs per unit.

Which of the Following Is True