If a scale economy is the dominant technological factor defining or establishing comparative advantage, then the underlying facts explaining why a particular country dominates world markets in some product may be pure chance, or historical accident
Explain, and compare this with the answer you would give for the Heckscher-Ohlin model of comparative advantage.
This statement is true, since the reason the seller is a monopolist may be that it happened to have been the first to produce this product in this country. It may have no connection to any supply or demand related factors; nor to any natural or man-made availability. This is all exactly the opposite of the Heckscher-Ohlin Neo-Classical model's explanation of the determinants of comparative advantage.
You might also like to view...
Which of the following sentences about the benefits of foreign investment is true?
a. Foreign investment is invited only in labor-intensive industries. b. Foreign investment has more effect on employment in developing countries. c. Most expenditures on research and development are made by the major developing countries. d. The ability of foreign firms to utilize modern technology in a developing country depends on having a supply of engineers and technical personnel in the host country. e. Foreign investment will improve balance of payments if the foreign investment is used to produce goods primarily for domestic consumption.
The market structure that is associated with big business in developed economies is
a. perfect competition. b. monopolistic competition. c. monopoly. d. oligopoly.