Both the United States and Canada produce automobiles and their components; however, each particular model or component is produced in only one of the two countries. Which of the following explains this pattern of production and trade?

Question

Quizplus · Accepted Answer

The pattern of production and trade can be explained by increasing returns to scale, where concentrating production in one location can lead to cost advantages and efficiencies, making it beneficial to specialize and trade.

Both the United States and Canada Produce Automobiles and Their