To analyze intra-industry trade, we change our assumptions about our trade models to allow:
A) price-conscious consumers.
B) short-run unemployment.
C) differentiated products.
D) perfect competition.

Question

Quizplus · Accepted Answer

Intra-industry trade is based on the exchange of differentiated products within the same industry. Therefore, the assumption of differentiated products is necessary to analyze this type of trade. Price-conscious consumers, short-run unemployment, and perfect competition are not specific assumptions required to analyze intra-industry trade.

To Analyze Intra-Industry Trade, We Change Our Assumptions About Our