Question

1. A broad reason that intra-industry trade between similar nations produces economic gains involves ________ because it allows producers to supply the market and variety to consumers.

A. specialization

B. learning

C. economies of scale

2. One of the advantages of intra-industry trade is the division of labor which leads to ________.

A. increased output and decreased costs

B. increases in the value chain

C. learning, innovation, and unique skills

Answer 1

1> B. learning

Since intra-industry trading allows workers and firms to learn and innovate on particular product and to focus on particular parts of the value chain, this leads to specialized learning which increases efficiency.

2> C. learning, innovation, and unique skills

As described in the last answer, intra-industry trading allows workers and firms to learn and innovate on particular product and to focus on particular parts of the value chain, this leads to specialized learning which increases efficiency.