Explain Why Positive Economies of Scale in One (Of Two)

question 11

Essay

Explain why positive economies of scale in one (of two) sectors may establish a comparative advantage for the large (as compared to the small) country in the production of the commodity which exhibits positive scale economies.

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Definitions:

Debt Costs

The total expenses associated with borrowing money, including interest payments and fees.

Financial Risk

The possibility of losing money on an investment or business venture, including the risk of not receiving anticipated returns.

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to be reinvested in its core business or to pay debt.

Source of Capital

Various origins from which businesses or individuals can obtain funds, including equity, debt, and internal generation.