Final answer:
True, vertical exchanges are tailored to specific industries while horizontal exchanges serve multiple industries with common products or services. Intra-industry trade between similar economies illustrates the benefits derived from specialization and economies of scale in production.
Step-by-step explanation:
The statement that vertical exchanges serve one industry while horizontal exchanges serve many industries that use the same products or services is true. Vertical exchanges are supply chains that provide products and services to a specific industry, focusing on various stages of production within that industry. On the other hand, horizontal exchanges occur when companies operate across multiple industries, offering goods or services that are applicable in various markets. For instance, the same type of computer software may be used in finance, education, and healthcare sectors.
When discussing intra-industry trade, it refers to trade activities where countries with similar economic statuses and capabilities import and export the same kinds of goods, such as cars or computers. This kind of trade is beneficial as it allows countries to specialize in particular tasks, leading to learning and economies of scale. It demonstrates how complex products can be manufactured in stages across different countries, optimizing productivity and cost-efficiency. An example is when parts of a car are produced in various countries and then assembled in another, benefiting from specialized skills and lower costs in each location.Intra-industry trade refers to the import and export of the same products within the same industry between countries. It is common among high-income economies with similar income levels, advanced technology, and well-educated workers. This type of trade is characterized by specialized learning in specific tasks and economies of scale. Examples of intra-industry trade include the United States importing and exporting automobiles, machinery, and computers.