CHAP 7

The goal of welfare economics is

• considered economically efficient.

• to maximize net social benefits.

• price but above a supply curve, up to the quantity sold.

• the sum of consumer and producer surplus is maximized.

dynamic increasing returns to scale

• a graphical representation of dynamic increasing returns to scale.

• trade that takes place between regions within countries

• average costs fall as cumulative output over time rises

• average costs fall as current output rises

what graph is used to represent dynamic returns to scale?

• external

• labour market pooling

• learning curve

• None

what is interregional trade?

• considered economically efficient

• An argument in support of protectionism

• trade that takes place within a country

• Temporary protectionism of industries to enable to gain experience

The learning curve describes the______relationship between______ and______.

• inverse; unit!cost; cumulative output

• direct; education; labor productivity

• direct; education; annual income

• inverse; education; annual income!

Patterns of interregional trade are primarily determined by______rather than______because factors of production are generally______.

• population; external economies; immobile

• external economies; population; mobile

• internal economies; external economies; mobile

• internal economies; population; immobile

The primary determinant of patterns of interregional trade is

• factor abundance

• centralized optimization

• accidents of history

• resource allocations

International trade and domestic trade differ because of

• Different government policies

• Immobility of factors

• Trade restrictions

• All of the above

International trade leads to greater economies of scale.

• TRUE

• FALSE

Which of the following is not a benefit of international trade?

• High wage levels for all domestic workers

• Lower domestic prices

• Development of more efficient methods and new products.

• A greater range of consumption choices.