If multiple countries are capable of producing an identical product in terms of quality and function, the price of exports will drop. This phenomenon is known as:
A) Economies of scale
B) Immiserating effect
C) Strategic trade policy
D) Opportunity cost

Question

Quizplus · Accepted Answer

The phenomenon described in the question is referred to as the immiserating effect, which is the idea that when multiple countries can produce the same product at the same quality level, the increased competition will drive down the price of exports and may cause the exporting countries to become worse off overall. This is because the reduced export revenues may not be offset by gains in terms of lower import prices or increased efficiencies in the market.

If Multiple Countries Are Capable of Producing an Identical Product