(a) Explain this followving concept: (i) Intra-Industry Trade (ii) External econ
ID: 1109783 • Letter: #
Question
(a) Explain this followving concept: (i) Intra-Industry Trade (ii) External economies of scale 2 marks] [2 marks 12 marks) [2 marks] (ii) Internal economies of scale (iv) The overlapping-demand hypothesis (b) Assume that (1) the computer software industry exhibits external scale economies, (2) India has a comparative advantage over the United States over computer software, (3) the Indian market for software is one-tenth the size of the US market, and (4) the US has a head start in the industry and currently produces for both the US and Indian markets Illustrate in a diagram, what would happen if India protected its software 6 marks] i. market? On what does your answer depend? i. If India did not protect its software market, would India capture the market? 6 marks Explain.Explanation / Answer
A)
i) Intra-industry Trade —— is the concept of exchanging goods and service that belongs to the same industry. It’s widely used in international trade where the same type of good and services is been imported and exported.
ii) External economies of scale —— external economies of scale are those which occur outside of a firm but within industry and by the cost of the industries minimizes. As the industry grows and become larger, the average cost of industries falls are termed as external economies and these are said to be positive economic of scale.
iii) Internal economies of scale —— is the process by which average cost of industries falls , as the industry expands its size and grows withing the industry itself. Thus it is not occur outside the firm ,its occur inside the firm which itself.
iv) The overlapping-demand hypothesis—— Linder hypothesis is also known as Overlapping demand hypothesis. Linder states that the countries whose having similar per capita income will consume similar quality product and thats why trade to each other.
B) please upload it again. It against chegg policy.
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