The new trade theory emerged from the thought that the ability of firm

QUESTION

The new trade theory emerged from the thought that the ability of firms to attain economies of scale might have important implications for international trade.

Indicate whether the statement is true or false.

ANSWER

TRUE
The new trade theory began to emerge in the 1970s when a number of economists pointed out that the ability of firms to attain economies of scale might have important implications for international trade. Economies of scale are unit cost reductions associated with a large scale of output.