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7.1   Economies of Scale and International Trade: An Overview 1) If

Question : 7.1   Economies of Scale and International Trade: An Overview 1) If : 1407627

 

7.1   Economies of Scale and International Trade: An Overview

1) If a firm's output more than doubles when all inputs are doubled, production is said to occur under conditions of

A) increasing returns to scale.

B) imperfect competition.

C) intra-industry equilibrium.

D) constant returns to scale

E) decreasing returns to scale.

2) One advantage of the specialization that results from international trade is that countries can take advantage of

A) scale economies.

B) production diversification

C) smaller countries.

D) taste reversals.

E) lower transport costs.

3) Why are increasing returns to scale and fixed costs important in models of international trade and imperfect competition?

4) If a firm's output doubles when all inputs are doubled, production is said to occur under conditions of

A) increasing returns to scale.

B) imperfect competition.

C) intra-industry equilibrium.

D) constant returns to scale

E) decreasing returns to scale.

5) If a firm's output less than doubles when all inputs are doubled, production is said to occur under conditions of

A) increasing returns to scale.

B) imperfect competition.

C) intra-industry equilibrium.

D) constant returns to scale

E) decreasing returns to scale.

7.2   Economies of Scale and Market Structure

1) The existence of external economies of scale

A) may be associated with a perfectly competitive industry.

B) cannot be associated with a perfectly competitive industry.

C) tends to result in one huge monopoly.

D) tends to result in large profits for each firm.

E) focuses more on individual firms than the industry as a whole.

2) The existence of internal economies of scale

A) cannot be associated with a perfectly competitive industry.

B) may be associated with a perfectly competitive industry.

C) is associated only with sophisticated products such as aircraft.

D) cannot form the basis for international trade.

E) focuses more on the industry than individual firms.

3) When there are external economies of scale, an increase in the size of the market will

A) increase the number of firms and lower the price per unit.

B) increase the number of firms and raise the price per unit.

C) decrease the number of firms and raise the price per unit.

D) decrease the number of firms and lower the price per unit.

E) not affect the number of firms, but will lower the price per unit.

4) If some industries exhibit internal increasing returns to scale in each country, we should not expect to see

A) perfect competition in these industries.

B) intra-industry trade between countries.

C) inter-industry trade between countries.

D) high levels of specialization in both countries.

E) increased productivity in both countries.

5) If a scale economy is the dominant technological factor defining or establishing comparative advantage, then the underlying facts explaining why a particular country dominates world markets in some product may be pure chance, or historical accident. Explain, and compare this with the answer you would give for the Heckscher-Ohlin model of comparative advantage.

6) External economies of scale arise when the cost per unit

A) falls as the industry grows larger and rises as the average firm grows larger.

B) rises as the industry grows larger and falls as the average firm grows larger.

C) falls as the industry and the average firm grows larger.

D) remains constant over a broad range of output.

E) rises as the industry and the average firm grows larger.

7) Internal economies of scale arise when the cost per unit

A) falls as the average firm grows larger.

B) rises as the industry grows larger.

C) falls as the industry grows larger.

D) rises as the average firm grows larger.

E) remains constant over a broad range of output.

8) Where there are internal economies of scale, the scale of production possible in a country is constrained by

A) the size of the domestic plus the foreign market.

B) the size of the country.

C) the size of the trading partner's country.

D) the size of the domestic market.

E) the size of the foreign market.

9) Internal economies of scale will ________ average cost when output is ________ by ________.

A) reduce; increased; a firm

B) increase; increased; a firm

C) reduce; increased; the industry

D) increase; increased; the industry

E) reduce; reduce; the industry

10) Why is it that if an industry is operating under conditions of internal scale economies then the resultant equilibrium cannot be consistent with the pure competition model?

11) Is it possible for an equilibrium that is consistent with purely competitive conditions to arise in an industry with positive scale economies? If so, explain how this could happen. If not, why not?

12) External economies of scale will ________ average cost when output is ________ by ________.

A) reduce; increased; the industry

B) reduce; increased; a firm

C) increase; increased; a firm

D) increase; increased; the industry

E) reduce; reduce; the industry

 

 

 

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