In the theory of overlapping demands, the gains from intra-industry trade are a result of:
A) a greater variety of products.
B) increasing return to scale.
C) imperfect competition.
D) re-export trade.
E) entrepot trade.

Question

Quizplus · Accepted Answer

The theory of overlapping demands suggests that intra-industry trade arises because consumers in different countries have similar preferences for a variety of products, leading to gains from trade through increased product variety.

In the Theory of Overlapping Demands, the Gains from Intra-Industry