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

Question

Quizplus · Accepted Answer

Economies of scale explain this pattern as producing a particular model or component in one location allows for cost advantages due to increased production levels, leading to specialization and trade between the two countries.

Both the United States and Mexico Produce Automobiles and Their