According to the New Trade Theory, Which of the Following

question 110

Multiple Choice

According to the new trade theory, which of the following is most likely to be a result of market expansion due to trade?

• A)A wide variety of products is produced at greater unit costs than in the absence of trade.
• B)As the variety of products increases, demand for individual products decreases, leading to non-realization of economies of scale.
• C)Each nation may specialize in producing a narrower range of products, importing goods that it does not make.
• D)The ability to capture first-mover advantages is restricted in a world that allows trade.
• E)When countries do not differ in their resource endowments or technology, trade does not offer mutual benefits.

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