If Hong Kong and Taiwan had identical labor costs but were subject to increasing costs of production,
A) trade would depend on differences in demand conditions.
B) trade would depend on economies of large-scale production.
C) trade would depend on the use of different currencies.
D) there would be no basis for gainful trade.

Question

Quizplus · Accepted Answer

If Hong Kong and Taiwan had identical labor costs but were subject to increasing costs of production, trade would depend on differences in demand conditions. This means that the demand for a particular product in one country may be higher than the other, leading to more trade in that particular product. Additionally, the demand for a particular product may also be affected by factors such as cultural differences and consumer preferences. Therefore, even if the labor costs are the same in both countries, trade may still occur based on differences in demand conditions. The other choices (B, C, and D) are not relevant in this scenario.

If Hong Kong and Taiwan Had Identical Labor Costs but Were