chapter 6 tmqt

External economies of scale arise when the cost per unit

• rises as the industry grows larger.

• falls as the industry grows larger rises as the average firm grows larger.

• falls as the average firm grows larger.

• remains constant.

• None of the above

Internal economies of scale arise when the cost per unit

• rises as the industry grows larger

• falls as the industry grows larger

• rises as the average firm grows larger.

• falls as the average firm grows larger

• None of the above.

External economies of scale

• may be associated with a perfectly competitive industry

• cannot be associated with a perfectly competitive industry

• tends to result in one huge monopoly

• tends to result in large profits for each firm.

• None of the above.

Internal economies of scale

• may be associated with a perfectly competitive industry

• cannot be associated with a perfectly competitive industry

• are associated only with sophisticated products such as aircraft.

• cannot form the basis for international trade

• None of the above

A monopolistic firm

• can sell as much as it wants for any price it determines in the market.

• cannot determine the price, which is determined by consumer demand

• will never sell a product whose demand is inelastic at the quantity sold

• cannot sell additional quantity unless it raises the price on each unit.

• None of the above

Monopolistic competition is associated with

• cut-throat price competition

• product differentiation

• explicit consideration at firm level of the feedback effects of other firms' pricing decisions.

• high profit margins

• None of the above.

The most common market structure is

• perfect competition

• monopolistic competition

• small-group oligopoly

• perfectly vertical integration

• None of the above

Modeling trade in monopolistic industries is problematic because

• there is no one generally accepted model of oligopoly behavior

• there are no models of oligopoly behavior.

• it is difficult to find an oligopoly in the real world

• collusion among oligopolists makes usable data rare

• None of the above.

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

• the size of the country

• the size of the trading partner's country

• the size of the domestic market

• the size of the domestic plus the foreign market.

• None of the above

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

• increase the number of firms and raise the price per unit.

• decrease the number of firms and raise the price per unit

• increase the number of firms and lower the price per unit

• decrease the number of firms and lower the price per unit.

• None of the above.