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True or False. Explain your answer. In the presence of dynamic increasing returns, a country can...

True or False. Explain your answer. In the presence of dynamic increasing returns, a country can be potentially better-off by closing its borders to international trade.

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Answer #1

Dynamic increasing returns is when the average cost reduces due to increasing commulative output .it mostly occurs when the cost of production depends on accumulation of knowledge and interest.

Dynamic increasing returns can provide a headstart or lock in period to an industry as a temperory protection to the infant industry.

So it is true, a country is potentially better off by closing borders of international trade for that industry.

(You can comment for doubts)

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