Consider the Sources of the Gains from International Trade

question 79

Multiple Choice

Consider the sources of the gains from international trade.Economies of scale and product differentiation can provide an explanation for

• A)countries remaining at their autarkic positions.
• B)countries trading in completely different products.
• C)the imposition of trade barriers.
• D)intra-industry trade.
• E)absolute advantage.

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Definitions:

Disposable Income

The income left over for personal spending after direct taxes have been subtracted from an individual’s gross income.

Consumption

The use of goods and services by households or individuals, typically relating to spending on products and services.

Permanent Income Hypothesis

A theory suggesting that a person's consumption at a point in time is determined not just by their current income but by their longer-term income expectations.

Consumer Binge

A period characterized by excessive spending and consumption by consumers.