Which of the following explains why many countries with relatively small populations import automobiles from Japan, the United States, and Germany instead of producing them domestically?

Question

Quizplus · Accepted Answer

Economies of scale are a significant reason why countries with relatively small populations import automobiles from countries like Japan, the United States, and Germany instead of producing them domestically. Automobile production requires large-scale investment in machinery and technology, and economies of scale allow for a more efficient production process and reduce per-unit costs. By importing cars, countries can take advantage of the larger scale of production in countries with more extensive auto industries. Differences in resource endowments, differences in tastes, import quotas, and import tariffs may also play a role in a country's decision to import instead of producing domestically, but they are not as significant as economies of scale.

Which of the Following Explains Why Many Countries with Relatively