International Economics_Lecture 2_Review

1. 1. What is the best explanation of economies of scale?

• A. Costs per unit increase as the volume of production increases.

  
  

• B. Costs per unit decrease as the volume of product decreases.

• C. Larger economies make more products.

• D. Cost per unit decreases as the volume of production increases.

2. Economies of scale' is also known as______

• A. Benefiting scales.

• B. Returns of scale

• C. EOS

• D. None of the above

4. 4. External economies of scale arise when the cost per unit_____

• A) Rises as the industry grows larger and falls as the average firm grows larger.

• B) Falls as the industry grows larger and rises 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

  
  

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

• 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

6. 6. What are the three main sources of the economic advantages derived from locating in such a district?

7.  (three main theories of  external economies of scale)

The advantages are (1) _________, (2)​________, and (3)​________.

(a)  

7. The long-run market supply curve in the presence of internal economies of scale is ________, and in the presence of external economies of scale, it is ________.

• A) downward sloping; downward sloping

• B) upward sloping; horizontal

• C) horizontal; upward sloping

• D) downward sloping; horizontal

• E) upward sloping; downward sloping

8. 8. If two countries begin to 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) lower; increase; 100%

• B) higher; increase; 100%

• C) higher; increase; 50%

• D) lower; increase; 50%

9. 9. If UK businesses started selling apples to the US for less than what they are worth in the US, then US apple producers would have a hard time selling their products to the domestic market.”

This is an instance of (a)   ?

 10. Which are the influences of dumping? 

(Choose more than one answer)

• A) Helps to gain market share and to clear unsold stock

• B) Help to increase the price in domestic market

• C) Minimizing Investment Risk (through larger market share)

  
  

• D) Benefit terms of export incentives, recognition, and cheap funds for exports

  
  

• E) Destroying Local Market

11. 11. When a country both exports and imports a type of commodity, the country is engaged in_________

• A) Inter-industry trade.

• B) An attempt to monopolize the relevant industry.

• C) Increasing returns to scale.

• D) Intra-industry trade.