Economies of scale:
A) contribute to the existence of intra-industry trade.
B) refers to the tendency for per unit costs to rise with the level of output.
C) do not contribute to the existence of intra-industry trade in differentiated products.
D) never occur in the production of homogeneous products.
E) are unrelated to intra-industry trade.

Question

Quizplus · Accepted Answer

Economies of scale refer to the reduction in per unit cost as the level of production increases. This concept contributes to intra-industry trade because firms can specialize in the production of certain goods or services, thereby achieving economies of scale, and trade with firms in other countries that specialize in different goods or services within the same industry.

Economies of Scale