Which of the following is an argument offered by the new trade theory?
A) It is in line with the factor proportions theory.
B) There are gains to be made from specialization and increasing economies of scale.
C) The companies first to market forgo the opportunities to create barriers to entry.
D) Market forces alone play a role in assisting the home companies in a country.

Question

Quizplus · Accepted Answer

The new trade theory argues that there are gains to be made from specialization and increasing economies of scale. This is different from the factor proportions theory, which emphasizes the importance of differences in factor endowments between countries. The theory also suggests that companies can create barriers to entry through first-mover advantages, which goes against option C, and that government intervention may be necessary to assist home companies, which contradicts option D.

Which of the Following Is an Argument Offered by the New