Suppose that industry X and industry Y have intra-industry trade indexes equal to 0.80 and 0.20, respectively. Which of the following is then correct?
A) There is a greater share of intra-industry trade in industry X than in industry Y.
B) There is a greater share of intra-industry trade in industry Y than in industry X.
C) Industry X and industry Y have equal shares of intra-industry trade.
D) There is no intra-industry trade in either industry X or industry Y.

Question

Quizplus · Accepted Answer

An intra-industry trade index measures the share of trade within the same industry. An index of 0.80 means that 80% of the trade in industry X is happening within that industry, while an index of 0.20 means that only 20% of the trade in industry Y is happening within that industry. Therefore, industry X has a greater share of intra-industry trade than industry Y.

Suppose That Industry X and Industry Y Have Intra-Industry Trade