What term is used to describe situations in which countries specialize in and trade different varieties of the same type of product?
A) comparative advantage
B) the Heckscher-Ohlin model
C) intra-industry trade
D) increasing returns to scale

Question

Quizplus · Accepted Answer

Intra-industry trade refers to situations in which countries specialize in and trade different varieties of the same type of product. This can be contrasted with inter-industry trade, in which countries specialize in and trade different types of products. Choice A refers to the theory that countries should specialize in producing goods they have a lower opportunity cost of producing, while choice B refers to a model that explains the pattern of trade based on differences in input costs. Choice D refers to the idea that higher levels of production can lead to lower average costs, but it is not directly related to intra-industry trade.

What Term Is Used to Describe Situations in Which Countries