While maintaining multiple production sites does provide a...

While maintaining multiple production sites does provide a firm valuable options, Multiple Choice a firm may miss out on economies of scope. a firm may miss out on economies of scope and economies of scale. a firm may miss out on economies of scale. a firm may find that exchange rate changes can fully offset the advantage of multiple manufacturing sites.

Labs

Want to see this concept in action?

NEW

Explore this concept interactively to see how it behaves as you change inputs.

View Labs

Transcript

00:01 So here we're talking about specialization in trade.

00:02 And the first thing you learn when you're studying trade is that countries should specialize in what they're good at, just like individuals should specialize what they're good at.

00:10 I shouldn't try to do eight jobs.

00:12 I should get really good at one job.

00:14 But there are some reasons while this might go bad.

00:18 And we're thinking about why this might go bad.

00:21 So first of all, sudden changes, right? natural disaster, sudden changes in taste and demand could cripple an industry.

00:27 Absolutely.

00:28 If you entirely specialize in one good, you're making yourself very, very vulnerable to changes in demand for your product, right? you know, if you grow only grapes and a new type of agricultural fungus emerges, which kills grapes, you're totally screwed.

00:45 If you make beanie babies and the beanie baby fad dies, then you're totally screwed, right? so these are good reasons to avoid specialization.

00:54 The fact that a sudden change or a natural disaster could cripple your key industry, right? you get very reliant on something.

01:03 B, dumping is easier and more effective.

01:06 This is just garbage.

01:07 This is not a good reason...

Question

Please give Ace some feedback