Final answer:
An advantage of intra-industry trading is the achievement of economies of scale, which can lead to increased productivity and lower prices for consumers. Specialization in production also allows countries to become more efficient and competitive in the international market.
Step-by-step explanation:
Advantages of Intra-Industry Trading
Intra-industry trading refers to the international trade of goods within the same industry. An advantage of this form of trading is that it allows countries to specialize in the production of certain products, leading to economies of scale. Economies of scale occur when the cost per unit of production decreases as the scale of production increases, which can happen when countries focus on producing certain goods. This specialization can lead to an increase in efficiency and productivity. Secondly, intra-industry trade provides consumers with a greater variety of goods at potentially lower prices due to increased competition and the aforementioned economies of scale.
The relationship between economies of scale and intra-industry trade is that the former is often an outcome of the latter. By focusing on producing a narrower range of goods, countries can produce more efficiently, thus reducing costs. This efficiency can increase the country’s competitiveness in the international market and enhance trade within the same industry.