Economies of scale and the experience curve

Question

Quizplus · Accepted Answer

Economies of scale and the experience curve affect international trade because they can permit a nation's industries to become low-cost producers without having an abundance of the resources used as inputs, such as minerals or labor. Then, just as in the case of comparative advantage, nations specialize in the production of a few products and trade with others to supply the rest of their needs. International trade is promoted because a nation's companies may not be able to fully achieve the potential economies of scale by serving only the domestic market, even within countries as large as the United States.

Economies of Scale and the Experience Curve