Scale economies are said to be present when:
an increase in output leads to an increase in average cost.
an increase in output has no impact on average cost.
an increase in output leads to a decrease in average cost.
here is a single firm in an industry.
_____ is a market structure in which a large number of firms compete vigorously with each other in producing and selling different varieties of a basic product.
Perfect competition
Monopoly
Oligopoly
Monopolistic competition
When firm X doubled its output, it was found that its cost per unit declined by 10%. It can be concluded that:
the firm was facing external scale diseconomies.
the firm was enjoying internal scale economies.
the firm was operating on the inelastic portion of the demand curve.
the marginal cost of production at the initial output level was constant.
Which of the following can best explain the clustering of some industries, such as high-technology computer production in Silicon Valley?
External scale economies
Perfect competition
Intra-industry trade
Comparative advantage
Which of the following refers to a two-way trade in which a country both exports and imports the same or very similar products?
Net trade
Inter-industry trade
Intra-industry trade
Internal trade
Which of the following is the formula for the intra-industry trade (IIT) share in a product’s total trade?
1 – |X - M|
1 - (X + M)
1 – [ |X - M| / (X + M)]
1 – [ |X + M| / (X - M)]
Which of the following indicates the difference between the volume of exports and imports of a product?
Net trade
Intra-industry trade
Total trade
Terms of trade
A monopolistically competitive firm:
sets price of its product equal to its marginal cost of production.
sells a homogeneous product in the market.
faces a perfectly elastic demand curve.
earns zero economic profits in the long-run.
Over time, intra-industry trade has become significantly smaller as a percentage of overall trade.
Scale economies help explain why products are produced in a limited number of varieties in a country.
Under monopolistic competition, new firms are barred from entering the industry in the long run.
In an oligopoly market, firms vigorously compete with each other by selling different varieties of the same product.
If substantial internal scale economies exist, production of a commodity tends to be concentrated in a few large facilities in a few countries.
If global market for personal computers is monopolistically competitive. A country engages in a two-way trade in personal computers, such trade is based on___.
external scale economies
comparative advantage
product differentiation
constant returns to scale
In oligopoly pricing, firms are caught in a situation called prisoner’s dilemma when they:
cooperate to maximize profits.
cooperate to minimize prices.
compete aggressively and earn high profits.
compete aggressively and earn low profits.
Relative to standard competitive trade, trade based on monopolistic competition has _____ impact on factor incomes.
greater
lower
the same
no
When external scale economies exist in an industry, which of the following groups is most likely to be left worse off after the opening of free trade?
Consumers in the importing country
Producers in the importing country
Consumers in the exporting country
Producers in the exporting country
Consumers of the exportable product in the exporting country gain when trade is based on:
different factor endowments.
technological differences.
external scale economies.
increasing-cost industries.