Question 1

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

Accepted Answer

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. 
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. A

Question 2

External economies of scale arise when the cost per unit

Accepted Answer

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. 
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. A

Question 3

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

Accepted Answer

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

Question 4

In the presence of external economies of scale, trade

Accepted Answer

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. 
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.

Question 5

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

Accepted Answer

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 
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

Question 6

Restaurant meals are an example of a ________ good and clothing is an example of a ________ good. The pattern of interregional trade is determined primarily by ________.

Accepted Answer

A)  nontraded; traded; external economies. 
B)  traded; nontraded; internal economies 
C)  nondurable; durable; natural resource 
D)  durable; nondurable; natural resources 
E)  consumer; style; population 
A)  nontraded; traded; external economies. 
B)  traded; nontraded; internal economies 
C)  nondurable; durable; natural resource 
D)  durable; nondurable; natural resources 
E)  consumer; style; population

Question 7

The existence of external economies of scale

Accepted Answer

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. 
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.

Question 8

If the firms in a market have constant returns to scale internally while there are external economies of scale for the industry, a firm's long-run supply curve will be ________ and the long-run market supply curve will be ________.

Accepted Answer

A)  downward sloping; downward sloping 
B)  upward sloping; horizontal 
C)  horizontal; downward sloping 
D)  downward sloping; horizontal 
E)  upward sloping; downward sloping 
A)  downward sloping; downward sloping 
B)  upward sloping; horizontal 
C)  horizontal; downward sloping 
D)  downward sloping; horizontal 
E)  upward sloping; downward sloping

Question 9

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 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?

Accepted Answer

Because once one firm will becomes bigge

Question 11

The Internet has made transactions between businesses (B2B trading) fast and easy. Any business in any location can access specialized knowledge, labor, and materials. It is likely that these virtual economic communities will result in

Accepted Answer

A)  external economies of scale. 
B)  internal economies of scale. 
C)  consolidation of industries into a small number of powerful firms. 
D)  suppression of innovations and collusive behavior, driving up prices. 
E)  government intervention and regulation. 
A)  external economies of scale. 
B)  internal economies of scale. 
C)  consolidation of industries into a small number of powerful firms. 
D)  suppression of innovations and collusive behavior, driving up prices. 
E)  government intervention and regulation.

Question 12

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.

Accepted Answer

This statement is True, since the reason

Question 13

Internal economies of scale arise when the cost per unit

Accepted Answer

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. 
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.

Question 14

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 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. 
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.

Question 15

If a firm's output more 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 16

If output is increased in the long-run, then in the presence of internal economies of scale the number of firms will ________, and in the presence of constant external returns to scale the number of firms 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 17

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.

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 18

What is meant by an "industrial district" and what are the three main sources of the economic advantages derived from locating in such a district?

Accepted Answer

An industrial community is a geographica

Question 19

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

Accepted Answer

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 
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

Question 20

The primary determinant of patterns of interregional trade is

Accepted Answer

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

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

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

External economies of scale arise when the cost per unit

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

In the presence of external economies of scale, trade

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

Restaurant meals are an example of a ________ good and clothing is an example of a ________ good. The pattern of interregional trade is determined primarily by ________.

The existence of external economies of scale

If the firms in a market have constant returns to scale internally while there are external economies of scale for the industry, a firm's long-run supply curve will be ________ and the long-run market supply curve will be ________.

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.

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?

The Internet has made transactions between businesses (B2B trading) fast and easy. Any business in any location can access specialized knowledge, labor, and materials. It is likely that these virtual economic communities will result in

Internal economies of scale arise when the cost per unit

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

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

If output is increased in the long-run, then in the presence of internal economies of scale the number of firms will ________, and in the presence of constant external returns to scale the number of firms will ________.

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.

What is meant by an "industrial district" and what are the three main sources of the economic advantages derived from locating in such a district?

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

The primary determinant of patterns of interregional trade is

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

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

Restaurant meals are an example of a good and clothing is an example of a good. The pattern of interregional trade is determined primarily by .

If the firms in a market have constant returns to scale internally while there are external economies of scale for the industry, a firm's long-run supply curve will be and the long-run market supply curve will be .

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 output is increased in the long-run, then in the presence of internal economies of scale the number of firms will , and in the presence of constant external returns to scale the number of firms will .

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.

The learning curve describes the relationship between and .