The intra-industry trade index is computed using the following formula:
A) (X - M).
B) (X - M)/(X + M).
C) |X - M|/(X + M).
D) 1 - |X - M|/(X + M).
E) (X + M)/(X - M).

Question

Quizplus · Accepted Answer

The intra-industry trade index is calculated as 1 - |X - M|/(X + M), where X represents the value of exports and M represents the value of imports. This formula measures the extent of trade overlap within an industry between two countries, indicating higher levels of intra-industry trade when the value approaches 1.

The Intra-Industry Trade Index Is Computed Using the Following Formula