5. Assess all the statements below and judge which of them is true and which is false. Provide a short justification for your assessment. a) One reason that a large share of the trade between high-income industrial economies is intraindustry trade is because higher incomes permit them to spend more money abroad. b) Economies of scale at a firm level imply the benefit of falling average costs in the long-run production. c) Simultaneous exports and imports of sub-compact cars of different brand names by a country is a good example of intra-industry trade.
5. Assess all the statements below and judge which of them is true and which is false.
Provide a short justification for your assessment.
a) One reason that a large share of the trade between high-income industrial economies is intraindustry trade is because higher incomes permit them to spend more money abroad.
b) Economies of scale at a firm level imply the benefit of falling average costs in the long-run
production.
c) Simultaneous exports and imports of sub-compact cars of different brand names by a country
is a good example of intra-industry trade.
d) External economies of scale occurring in a country or region imply that firms abroad can
benefit from more intensive trade relations.
e) If Germany imports copy machines from the rest of the world for a total value of €100 million
and at the same time exports copy machines to the rest of the world for a total value of €500
million, the index of intra-industry trade in this case is equal to 0.6.
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