What term is used to describe situations where countries
Specialize in and trade different varieties of the same type of
Product?
A)comparative advantage
B)the HeckscherOhlin model
C)intraindustry trade
D)increasing returns to scale

Question

What term is used to describe situations where countries
Specialize in and trade different varieties of the same type of
Product?
A)comparative advantage
B)the Heckscher­Ohlin model
C)intra­industry trade
D)increasing returns to scale

Quizplus · Accepted Answer

Intra-industry trade occurs when countries specialize in and trade different varieties of the same type of product within the same industry. This is different from inter-industry trade where countries trade completely different types of products. Comparative advantage refers to a country's ability to produce a good or service at a lower opportunity cost than another country. The Heckscher-Ohlin model is a theory that explains why countries trade based on their factor endowments (such as labor, capital, and natural resources). Increasing returns to scale refer to the phenomenon where the cost of producing a good decreases as the scale of production increases.

What Term Is Used to Describe Situations Where Countries