The theory of overlapping demands states that:
A) average income levels determine the tastes and preferences of consumers within a country.
B) countries with a low average income are more likely to trade with countries with a high average income.
C) countries are likely to trade with other countries that have similar income levels.
D) both a and c
E) both b and c

Question

Quizplus · Accepted Answer

The theory of overlapping demands suggests that countries with similar income levels are more likely to trade with each other because their consumers will have similar tastes and preferences, which are also influenced by average income levels within a country.

The Theory of Overlapping Demands States That