According to new trade theory, what 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.

Question

Quizplus · Accepted Answer

New trade theory suggests that market expansion due to trade allows countries to specialize in producing a narrower range of products, benefiting from economies of scale, and import goods that they do not produce.

According to New Trade Theory, What Is Most Likely to Be