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Why Is a Small Country More Likely to Gain from International

Question 71

Multiple Choice

Why is a small country more likely to gain from international trade than a large country?


A) Because autarkic relative prices in a small country are likely to be quite different from the world relative prices.
B) Because a small country,unlike a large country,does not have the resources it needs to be self-sufficient.
C) Because small countries tend to be specialized in their production,while large countries tend to be diversified.
D) Because a small country is less likely to encounter decreasing returns to scale than is a large country.

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