What is intraindustry trade?
• Why do countries engage in intraindustry
trade?
Using trade data for country A given in the table
below, calculate the value of its intraindustry trade:
Country A Exports Imports
Good X 2000 1800
Good Y 1000 1500
Good Z 1500 1200
Total 4500 4500
For each of the following examples, explain whether it is
a case of external or internal economies of scale:
a) Most musical wind instruments in the United States
are produced by more than a dozen factories in
Elkhart, Indiana.
b) All Hondas sold in the United States are either
imported or produced in Marysville, Ohio.
c) All airframes for Airbus, Europe’s only producer of
large aircraft, are assembled in Toulouse, France
