Product differentiation and internal economies of scale yield gains from trade in the form of

Question

Quizplus · Accepted Answer

Product differentiation allows firms to charge a premium price for their unique products, leading to higher profits. Meanwhile, internal economies of scale lead to lower production costs, which can be passed on to consumers in the form of lower prices or reinvested into the company. Both of these factors also contribute to a greater variety of goods on the market, providing consumers with more choices. Overall, these benefits result in gains from trade for all parties involved.

Product Differentiation and Internal Economies of Scale Yield Gains from Trade