Question
1. What is meant by economies of scale? How can they be the basis for international trade? What is meant by the new international economies
1. What is meant by economies of scale? How can they be the basis for international trade? What
is meant by the "new international economies of scale"?
2. What is meant by product differentiation? Why does this result in imperfect competition? How can international trade be based on product differentiation?
3. How can intra-industry trade be measured? What are the shortcomings of such a measure?
4 What do we mean by monopolistic competition? Why do we use this model to examine?
intra-industry trade?
5. Why is it that the greater the number of firms is in a monopolistically competitive industry the lower the price is, but the higher the average cost of each firm is for a given level of output?
6.How do different environmental standards affect industry location and international trade?
7.How can international trade take place according to the technological gap model? What criticisms are leveled against this model? What does the product cycle model postulate? What are the various stages in a product life cycle?
8. How can we deduce that nations benefit from voluntarily engaging in international trade?
9. If nations gain from international trade, why do you think most of them impose some restrictions on the free flow of international trade?
10. Can you think of some ways by which a nation can gain at the expense of other nations from trade restrictions?
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