Final answer:
Economies of scale reduce the cost per unit by producing at high volumes, and international trade enables small economies to benefit from scale alongside competition and variety.
Step-by-step explanation:
The student asked about economies of scale which provide incentives for producers to operate at high volumes to reduce the cost of a product. In the context of international trade, economies of scale allow even small economies to reap the benefits of large-scale production.
For instance, a single large automobile factory could meet the demand for cars in a small country, but without international trade, consumers would have limited choices, and there would be little to no competition among manufacturers. However, when countries engage in international trade, they open up to competition and gain access to a variety of products, which can drive prices down and increase quality due to competition among producers.
International trade removes barriers and allows multiple large companies to compete, providing a diverse range of products to consumers and further encouraging economic efficiencies via economies of scale. This enhances the possibilities for smaller economies to benefit from large-scale production without sacrificing the advantages of competition and variety.