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7.4   External Economies and International Trade 1) If two countries begin

Question : 7.4   External Economies and International Trade 1) If two countries begin : 1407629

 

7.4   External Economies and International Trade

1) If two countries begin trade and both produce a product subject to external economies of scale, then the country with the ________ rate of production will ________ production until it controls ________ of the market.

A) higher; increase; 100%

B) higher; increase; 50%

C) lower; increase; 100%

D) lower; increase; 50%

E) higher; decrease; 0%

2) Explain why positive economies of scale in one (of two) sectors may establish a comparative advantage for the large (as compared to the small) country in the production of the commodity which exhibits positive scale economies.

3) In the presence of external economies of scale, trade

A) may or may not improve welfare in both countries.

B) will unambiguously improves welfare in both countries.

C) will unambiguously worsens welfare in both countries.

D) will unambiguously worsen welfare in the exporting country and improve welfare in the importing country.

E) will unambiguously improve welfare in the exporting country and worsen welfare in the importing country.

4) A learning curve relates ________ to ________ and is a case of ________ returns.

A) unit cost; cumulative production; dynamic increasing returns

B) output per time period; long-run marginal cost; dynamic increasing returns

C) unit cost; cumulative production; dynamic decreasing returns

D) output per time period; long-run marginal cost; dynamic decreasing returns

E) labor productivity; education; increasing marginal returns

5) The learning curve describes the ________ relationship between ________ and ________.

A) inverse; unit cost; cumulative output

B) direct; unit cost; cumulative output

C) inverse; education; annual income

D) direct; education; annual income

E) direct; education; labor productivity

6) If two countries begin trade and both produce a product subject to internal economies of scale, then the country with the ________ rate of production will ________ production until it controls ________ of the market.

A) higher; increase; 100%

B) higher; increase; 50%

C) lower; increase; 100%

D) lower; increase; 50%

E) higher; decrease; 0%

7) Suppose that two countries, A and B, employ the same technology in the production of a good. External economies of scale apply in both countries. Analyze the effects of trade on long-run production levels if country A has a comparatively lower cost of production when trade begins.

 

 

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