If Some Industries Exhibit Internal Increasing Returns to Scale in Each

question 27

Multiple Choice

If some industries exhibit internal increasing returns to scale in each country, we should not expect to see

• A) intra-industry trade between countries.
• B) high levels of specialization in both countries.
• C) inter-industry trade between countries.
• D) perfect competition in these industries.
• E) increased productivity in both countries.

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Definitions:

Speculative Demand

Demand for a good or service based not on its inherent value or utility, but on expectations of future price changes or market conditions.

Abrupt Drop

A sudden and steep decline in the value or level of something, such as the stock market or an individual stock.

Marketable Securities

Highly liquid short-term debt investments held by companies instead of cash. Marketable securities provide nearly the liquidity of cash but earn a modest return.

Liquid Investments

Liquid investments are assets that can be quickly and easily converted into cash without significant loss of value.