Because of substantial economies of scale,the __________ theory argues that in many industries there are increasing returns to specialization.

Question

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The theory of new trade argues that in industries with substantial economies of scale, there are increasing returns to specialization. This means that the more a firm specializes in producing a particular product, the more efficient and productive it becomes, leading to lower costs and higher outputs. As a result, this theory suggests that countries should specialize in producing goods and services that they have a comparative advantage in, and then trade with other countries to maximize global efficiency and output.

Because of Substantial Economies of Scale,the __________ Theory Argues That