According to new trade theory, as a company increases the extent to which it specializes in the production of a particular good, output rises because of gains in efficiency.

Question

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New trade theory suggests that companies can achieve economies of scale and gain efficiency by specializing in the production of a particular good, which ultimately leads to increased output. This is because of the ability to spread fixed costs over larger quantities of output, leading to lower average costs and increased competitiveness.

According to New Trade Theory, as a Company Increases the Extent