Since joining NAFTA in the early 1990s,Canada has experienced increases in productivity and output in many export-oriented industries because of economies of scale and learning by doing.In these industries,these gains from trade will lead to

Question

Quizplus · Accepted Answer

The gains from trade in export-oriented industries due to economies of scale and learning by doing will lead to downward shifts of the long-run average cost (LRAC) curve. This is because firms can achieve greater efficiency through producing at larger scales and gaining experience over time, leading to lower per-unit costs. As a result, the LRAC curve will shift downward. Additionally, there may be movement to the right along the LRAC curve as firms continue to gain experience and achieve even lower costs in the long run. Therefore, the best choice is D, as it accounts for both downward shifts of the LRAC curve and movement to the right along the curve.

Since Joining NAFTA in the Early 1990s,Canada Has Experienced Increases