Under Some Circumstances,trade Could Stifle the Development of New Industries

question 56

Multiple Choice

Under some circumstances,trade could stifle the development of new industries and reduce global efficiency.All of the following describe conditions that could lead to that situation except

• A)an initial head start gives a scale advantage to already existing firms in one country.
• B)diseconomies of scale make it impossible for new firms to enter the market.
• C)a location has a better-developed linkage between suppliers and producers, giving it a cost advantage.
• D)a historical accident, such as the shifting of airplane production to the United States to avoid World War II bombings, causes firms in one location to have a competitive advantage.

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, usually entailing dividend payments before dividends are distributed to common stockholders.

Cash Flow

The total amount of money being transferred into and out of a business, particularly concerning liquidity.

Cash Flow Statement

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

Common Stock

A type of equity security that represents ownership in a corporation and entitles the holder to a claim on part of the company's profits in the form of dividends.