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    Question

    New trade theory Krugman predicts

    _____
    A patterns of international trade based solely on comparative advantage. Correct Answer Incorrect Answer
    B the exact pricing strategies firms will use in global markets. Correct Answer Incorrect Answer
    C why labor and capital tend to concentrate in certain countries and regions. Correct Answer Incorrect Answer
    D the complete elimination of trade barriers between nations. Correct Answer Incorrect Answer

    Solution

    New trade theory by Krugman predicts why labor and capital tend to concentrate in certain countries and regions. It emphasizes factors like economies of scale, network effects, and historical contingencies in explaining trade patterns, moving beyond traditional comparative advantage.

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