The international trade theory that focuses on consumer demands and preferences is the _________________________________________.
A)Supply and Demand Theory
B)New Trade Theory
C)Product Life Cycle Theory
D)Gravity Theory

Question

Quizplus · Accepted Answer

The New Trade Theory emphasizes the role of economies of scale and network effects, suggesting that trade patterns are influenced by consumer preferences and the increasing returns to scale for firms in specific industries. It moves beyond traditional theories that focus primarily on comparative advantage and factor endowments, highlighting the importance of market size and the role of consumers in shaping international trade dynamics.

The International Trade Theory That Focuses on Consumer Demands and Preferences