Suppose country A had been traditionally enjoying a comparative advantage in the production of good X. As a result most of the large firms manufacturing and exporting good X were concentrated in country A. However, recently it has been observed that the comparative advantage in the production of good X has shifted to country B owing better factor availability and lower input prices. Some new firms are contemplating to start operating in country B. Which of the following conditions probably must be fulfilled to ascertain that these new firms will enjoy cost advantage over the established firms in country A?
A.
The number of firms to begin operation in country B must be greater than the number of firms operating in country
B.
The consumers in country B should have a relatively elastic demand compared to the consumers in country
C.
The newfirms in country B should have a higher input-output ratio than the firms operating in country A
D.
The output level of the new firms in country B should be large enough to enable them to enjoy scale economies.