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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

You just overheard your friend say the following:

“Poor countries like Malawi have no absolute

advantages. They have poor soil, low investments in formal education, and hence low-skill workers, no capital, and no natural resources to speak of. Because they have no advantage, they cannot benefit from trade.” How would you respond?

Can a nation’s comparative advantage change over

time? What factors would make it change?

Look at Exercise 19.2. Compute the opportunity

costs of producing sweaters and wine in both France and Tunisia. Who has the lowest opportunity cost of producing sweaters and who has the lowest opportunity cost of producing wine? Explain what it means to have a lower opportunity cost.

What is intra-industry trade?

Are the gains from international trade more likely

to be relatively more important to large or small

countries?
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