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Chapter 19: Q 24. (page 462)

Do consumers benefit from intra-industry trade?

Short Answer

Expert verified

Yes, the consumers will benefit from intra- industry trade.

Step by step solution

01

Step 1. Definition

Trade of similar products belonging to the same industry is known as intraindustry trade.

In international trade, it refers to situation where same types of products are both exported and imported.

02

Step 2. Explanation

Yes, the consumers get great profits and benefits from Intra- industry trade because now the prices they get are lower than before and they have a large variety of products to choose from. This happens because now the products are offered by many firms that’s why competition is increases and quality also increases so the consumer is benefitted from all sides.

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Most popular questions from this chapter

What is splitting up the value chain?

In France it takes one worker to produce one sweater, and one worker to produce one bottle of wine. In Tunisia it takes two workers to produce one sweater, and three workers to produce one bottle of wine. Who has the absolute advantage in production of sweaters? Who has the absolute advantage in the production of wine? How can you tell?

If trade increases world GDP by 1% per year, what is the global impact of this increase over 10 years? How does this increase compare to the annual GDP of a country like Sri Lanka? Discuss. Hint: To answer this question, here are steps you may want to consider. Go to the World Development Indicators (online) published by the World Bank. Find the current level of World GDP in constant international dollars. Also, find the GDP of Sri Lanka in constant international dollars. Once you have these two numbers, compute the amount the additional increase in global incomes due to trade and compare that number to Sri Lanka’s GDP.

What factors does Paul Krugman identify that

supported expanding international trade in the 1800s?

How can there be any economic gains for a country from both importing and exporting the same good, like cars?
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