The new trade theory diverts from its advocacy of free trade by sugges

QUESTION

The new trade theory diverts from its advocacy of free trade by suggesting that:

A. the price of a new product increases along with the increase in the popularity of the product.

B. nations benefit from trade even in the absence of resource endowments and technology.

C. there is an economic rationale for a proactive trade policy.

D. the role of luck, entrepreneurship, and innovation is important in giving a firm first-mover advantages.

E. market expansion leads to better realization of economies of scale.

ANSWER

C