Question 1

External economies of scale often arise because similar firms

Accepted Answer

A)  have excellent internal logistics. 
B)  locate in the same geographic region. 
C)  collude to fix prices and increase profits. 
D)  agree to cooperate to expand global trade. 
E)  have economies of scale in production. 
A)  have excellent internal logistics. 
B)  locate in the same geographic region. 
C)  collude to fix prices and increase profits. 
D)  agree to cooperate to expand global trade. 
E)  have economies of scale in production. B

Question 2

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

Accepted Answer

A)  inverse; education; annual income 
B)  direct; education; annual income 
C)  direct; education; labor productivity 
D)  inverse; unit cost; cumulative output 
E)  direct; unit cost; cumulative output 
A)  inverse; education; annual income 
B)  direct; education; annual income 
C)  direct; education; labor productivity 
D)  inverse; unit cost; cumulative output 
E)  direct; unit cost; cumulative output D

Question 3

External economies of scale arise when the cost per unit

Accepted Answer

A)  rises as the industry and the average firm grows larger. 
B)  remains constant over a broad range of output. 
C)  falls as the industry and the average firm grows larger. 
D)  falls as the industry grows larger and rises as the average firm grows larger. 
E)  rises as the industry grows larger and falls as the average firm grows larger. 
A)  rises as the industry and the average firm grows larger. 
B)  remains constant over a broad range of output. 
C)  falls as the industry and the average firm grows larger. 
D)  falls as the industry grows larger and rises as the average firm grows larger. 
E)  rises as the industry grows larger and falls as the average firm grows larger. D

Question 4

Internal economies of scale arise when the cost per unit

Accepted Answer

A)  falls as the industry grows larger. 
B)  remains constant over a broad range of output. 
C)  rises as the industry grows larger. 
D)  falls as the average firm grows larger. 
E)  rises as the average firm grows larger. 
A)  falls as the industry grows larger. 
B)  remains constant over a broad range of output. 
C)  rises as the industry grows larger. 
D)  falls as the average firm grows larger. 
E)  rises as the average firm grows larger.

Question 5

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

Accepted Answer

A)  unit cost; cumulative production; dynamic increasing 
B)  output per time period; long-run marginal cost; dynamic decreasing 
C)  output per time period; long-run marginal cost; dynamic increasing 
D)  unit cost; cumulative production; dynamic decreasing 
E)  labor productivity; education; increasing marginal 
A)  unit cost; cumulative production; dynamic increasing 
B)  output per time period; long-run marginal cost; dynamic decreasing 
C)  output per time period; long-run marginal cost; dynamic increasing 
D)  unit cost; cumulative production; dynamic decreasing 
E)  labor productivity; education; increasing marginal

Question 6

The share of ________ goods in employment is ________ across the country. The share of ________ goods in employment is ________ across the country.

Accepted Answer

A)  nontraded; uniform; traded; variable 
B)  nondurable; uniform; durable; variable 
C)  durable; uniform; nondurable; variable 
D)  traded; uniform; nontraded; variable 
E)  nontraded; variable; traded; uniform 
A)  nontraded; uniform; traded; variable 
B)  nondurable; uniform; durable; variable 
C)  durable; uniform; nondurable; variable 
D)  traded; uniform; nontraded; variable 
E)  nontraded; variable; traded; uniform

Question 7

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

Accepted Answer

A)  intra-industry trade between countries. 
B)  high levels of specialization in both countries. 
C)  inter-industry trade between countries. 
D)  perfect competition in these industries. 
E)  increased productivity in both countries. 
A)  intra-industry trade between countries. 
B)  high levels of specialization in both countries. 
C)  inter-industry trade between countries. 
D)  perfect competition in these industries. 
E)  increased productivity in both countries.

Question 8

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

Accepted Answer

A)  scale economies. 
B)  taste reversals. 
C)  production diversification 
D)  smaller countries. 
E)  lower transport costs. 
A)  scale economies. 
B)  taste reversals. 
C)  production diversification 
D)  smaller countries. 
E)  lower transport costs.

Question 9

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

Accepted Answer

A)  increasing returns to scale. 
B)  imperfect competition. 
C)  intra-industry equilibrium. 
D)  constant returns to scale 
E)  decreasing returns to scale. 
A)  increasing returns to scale. 
B)  imperfect competition. 
C)  intra-industry equilibrium. 
D)  constant returns to scale 
E)  decreasing returns to scale.

Question 10

The existence of external economies of scale

Accepted Answer

A)  tends to result in large profits for each firm. 
B)  may be associated with a perfectly competitive industry. 
C)  cannot be associated with a perfectly competitive industry. 
D)  tends to result in one huge monopoly. 
E)  focuses more on individual firms than the industry as a whole. 
A)  tends to result in large profits for each firm. 
B)  may be associated with a perfectly competitive industry. 
C)  cannot be associated with a perfectly competitive industry. 
D)  tends to result in one huge monopoly. 
E)  focuses more on individual firms than the industry as a whole.

Question 11

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

Accepted Answer

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 
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

Question 12

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

Accepted Answer

A)  reduce; increased; a firm 
B)  reduce; increased; the industry 
C)  increase; increased; a firm 
D)  reduce; reduce; the industry 
E)  increase; increased; the industry 
A)  reduce; increased; a firm 
B)  reduce; increased; the industry 
C)  increase; increased; a firm 
D)  reduce; reduce; the industry 
E)  increase; increased; the industry

Question 13

The primary determinant of patterns of interregional trade is

Accepted Answer

A)  accidents of history. 
B)  centralized optimization. 
C)  resource allocations. 
D)  weather. 
E)  factor abundance. 
A)  accidents of history. 
B)  centralized optimization. 
C)  resource allocations. 
D)  weather. 
E)  factor abundance.

Question 14

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

Accepted Answer

A)  increasing returns to scale. 
B)  imperfect competition. 
C)  intra-industry equilibrium. 
D)  constant returns to scale 
E)  decreasing returns to scale. 
A)  increasing returns to scale. 
B)  imperfect competition. 
C)  intra-industry equilibrium. 
D)  constant returns to scale 
E)  decreasing returns to scale.

Question 15

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.

Accepted Answer

In the case of the H-O model, the actual

Question 16

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?

Accepted Answer

Yes. If the scale economies we

Question 17

If output is increased in the long run, average production costs in the presence of internal diseconomies of scale will ________, and in the presence of external diseconomies of scale, will ________.

Accepted Answer

A)  decrease; decrease 
B)  increase; remain constant 
C)  remain constant; increase 
D)  decrease; remain constant 
E)  increase; decrease 
A)  decrease; decrease 
B)  increase; remain constant 
C)  remain constant; increase 
D)  decrease; remain constant 
E)  increase; decrease

Question 18

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

Accepted Answer

A)  the size of the country. 
B)  the size of the domestic market. 
C)  the size of the trading partner's country. 
D)  the size of the foreign market. 
E)  the size of the domestic plus the foreign market. 
A)  the size of the country. 
B)  the size of the domestic market. 
C)  the size of the trading partner's country. 
D)  the size of the foreign market. 
E)  the size of the domestic plus the foreign market.

Question 19

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.

Accepted Answer

A)  higher; increase; 100% 
B)  higher; increase; 50% 
C)  lower; increase; 100% 
D)  lower; increase; 50% 
E)  higher; decrease; 0% 
A)  higher; increase; 100% 
B)  higher; increase; 50% 
C)  lower; increase; 100% 
D)  lower; increase; 50% 
E)  higher; decrease; 0%

Question 20

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

Accepted Answer

A)  intra-industry equilibrium. 
B)  decreasing returns to scale. 
C)  imperfect competition. 
D)  increasing returns to scale. 
E)  constant returns to scale 
A)  intra-industry equilibrium. 
B)  decreasing returns to scale. 
C)  imperfect competition. 
D)  increasing returns to scale. 
E)  constant returns to scale

Exam 7: External Economies of Scale and the International Location of Production

External economies of scale often arise because similar firms

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

External economies of scale arise when the cost per unit

Internal economies of scale arise when the cost per unit

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

The share of ________ goods in employment is ________ across the country. The share of ________ goods in employment is ________ across the country.

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

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

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

The existence of external economies of scale

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

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

The primary determinant of patterns of interregional trade is

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

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.

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?

If output is increased in the long run, average production costs in the presence of internal diseconomies of scale will ________, and in the presence of external diseconomies of scale, will ________.

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

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.

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

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, Crisis, and Reform

Filters

The learning curve describes the relationship between and .

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

The share of goods in employment is across the country. The share of goods in employment is across the country.

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

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

If output is increased in the long run, average production costs in the presence of internal diseconomies of scale will , and in the presence of external diseconomies of scale, will .

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.