Preference similarity explains why:
A)monopoly power has grown tremendously.
B)low cost producers can still enjoy economies of scale.
C)profits are at an all-time high in the industrialized world.
D)intra-industry trade has grown tremendously among the industrialized countries with similar income levels.
E)comparative advantage theory works best in third world countries.

Question

Quizplus · Accepted Answer

Preference similarity among industrialized countries with similar income levels leads to increased intra-industry trade, as these countries often produce and trade similar goods and services that cater to similar tastes and preferences of their consumers. This phenomenon is distinct from the traditional comparative advantage theory, which explains trade by differences in countries' production capabilities.

Preference Similarity Explains Why