This refers to economies that are unique to a firm. For instance, a firm may hold a patent over a mass production machine, which allows it to lower its average cost of production more than other firms in the industry.

These refer to economies of scale enjoyed by an entire industry. For instance, suppose the government wants to increase steel production. In order to do so, the government announces that all steel producers who employ more than 10,000 workers will be given a 20% tax break.

markets in which there are many buyers and sellers, none of whom represents a large part of the market—firms are price takers.

is a concept in microeconomics that describes a market structure controlled entirely by market forces.

occurs in a market when one of the conditions in a perfectly competitive market are left unmet

In __________ there is only one (dominant) seller. That company offers a product to the market that has no substitute.

In an________ there are many buyers but only a few sellers. Oil companies, grocery stores, cellphone companies, and tire manufacturers

occurs when there are many sellers who offer similar products that aren't necessarily substituted. Although the barriers to entry are fairly low and the companies in this structure are price makers, the overall business decisions of one company do not affect its competition. Examples include fast food restaurants like McDonald's and Burger King.

When firms differ in terms of their performance, economic integration generates winners and losers.

•Firms can set the same prices across markets. These prices reflect trade costs as well as the level of competition perceived by the firm.

Modeling imperfect competition means that we will explicitly consider the behavior of individual firms. This will allow us to introduce two additional characteristics of firms that are prevalent in the real world

In a perfectly competitive market—markets in which there are many buyers and sellers, none of whom represents a large part of the market—firms are price takers. That is, they are sellers of products who believe they can sell as much as they like at the current price but cannot influence the price they receive for their product. For example, a wheat farmer can sell as much wheat as she likes without worrying that if she tries to sell more wheat, she will depress the market price. The reason she need not worry about the effect of her sales on prices is that any individual wheat grower represents only a tiny fraction of the world market.

A second source of external economies is the way that a cluster of firms can create a pooled market for workers with highly specialized skills. Such a pooled market is to the advantage of both the producers and the workers, as the producers are less likely to suffer from labor shortages and the workers are less likely to become unemployed.

External economies give an important role to history and accident in determining the pattern of international trade. When internal economies are important, a country starting with a large advantage may retain that advantage even if another country could potentially produce the same goods more cheaply. When external economies are important, countries can conceivably lose from trade.

It makes it possible for each country to produce a restricted range of goods and to take advantage of economies of scale without sacrificing variety of consumption.

What occurs when the cost per unit depends on the size of the industry but not necessarily on the size of any one firm?

What occurs when the cost per unit depends on the size of an individual firm but not necessarily on that of the industry?

What will happen to the market structure when the economies of scale are purely external?

What will happen to the market structure when the economies of scale are purely internal?

It is the geographical concentrations of businesses that could not be easily explained by natural resources.

It is the informal exchange of information and ideas that takes place at a personal level.

They are companies or individuals that provide unique equipment and support services in the development of new products.

This is the result of the creation of the cluster of firms whereby employees increase in population and availability within a given geographical location?

It is the underlying differences in technology and resources.

When an economy opens up to trade, in exports the good whose relative price has ________.

Something gives a particular location an initial advantage in a particular industry, and this advantage gets “locked in” by external economies of scale even after the circumstances that created the initial advantage are no longer relevant.

Other things equal, what does a bigger industry generate?

What is the name of the British economist who was struck by the phenomenon of industrial districts?

The world becomes more efficient and richer because international trade allows nations to do what?

When costs fall with cumulative production over time rather than with the current rate of production, this is referred to as?

The argument for temporary protection of industries to enable them to gain experience is known as?

It is a trade that takes place between regions within countries

What happens to the firm’s average cost of production in the production of more output when there is an internal economies of scale?

What improves as production is concentrated toward better performing firms?

Which of the following is a characteristic of a perfectly competitive market?

What is the position of firms in pricing decision in a perfectly competitive market?

What is the position of firms in pricing decision in a imperfectly competitive market?

What is the market structure where a firm faces no competition?

What is the market structure where each firm will consider the expected responses of competitors when setting their price?

This market structure arises when equilibrium number of competing firms is large and no firm attains a substantial market share.

Normally what does a firm making high profits attracts?

What influences the number of firms in a monopolistically competitive industry and the prices they charge?.

What does international trade creates?

What kind of trade accounts for one-quarter to nearly one-half of all world trade flows?

Which of the following trade agreements does not include Mexico?

What does EEC stands for?

What sector is substantially more likely to export?

What is the response of exporting firm towards trade cost?

What is the term used to refer to the substitute for vertical FDI?

Ever since _____________ published The Wealth of Nations in 1776, the vast majority of economists have accepted the proposition that free trade among nations improves overall economic welfare.

__________ is defined as the absence of tariffs, quotas, or other governmental impediments to international

trade, allows each country to specialize in the goods it can produce cheaply and efficiently relative to other countries.

◦Since the GATT began in________ average tariffs set by industrial countries have fallen from about 40 percent to about 5 percent today. These tariff reductions helped promote the tremendous expansion of world trade after World War II and the concomitant rise in real per capita incomes among developed and developing nations alike.

In __________, the GATT became the World Trade Organization (WTO), which now has more than 140 member countries.

A _________is a group of countries that eliminate all tariffs on trade with each other but retain autonomy in determining their tariffs with nonmembers.

A _________ is a tax imposed by one country on the goods and services imported from another country

__________________________ regulate international trade between two or more nations it may cover all imports and exports, certain categories of goods, or a single category. The United States is currently engaged in some 320 trade agreements with various nations.

The World Trade Organization (WTO) is a global organization, headquartered in _________, for dealing with trade between nations.

Established in January 1995 by the Uruguay round negotiations under GATT, the WTO included 144 nations as of___________. The WTO administers trade agreements, provides a forum for trade negotiations and resolving trade disputes, monitors trade policies, and provides technical assistance and training for developing countries.

The customs union exception was designed, in part, to accommodate the formation of the European Economic Community (EC) in _______.

A ___________ is a group of countries that eliminate all tariffs on trade among themselves but maintain a common external tariff on trade with countries outside the union

In the early 19th century, English economist _____________ offered an explanation of trade in terms of international differences in labor productivity, an explanation that remains a powerful insight

It is one of the seven themes of international economics where an exchange of goods and services between countries almost always result to mutual benefit

Which are the misconception about comparative advantage (myth)

Determine which country has the comparative advantage:

The US can produce 20 planes

France can produce 12 planes

United States, Canada, and Mexico are part of what trade agreement which ensures that most goods shipped among the three countries are not subject to tariffs or other barriers to international trade?

In our contemporary time, what type of goods make up the majority of share in world trade?.

The large trade of Belgium and the Netherlands suggests what factor that plays an important role in determining the volume of trade?

What is one of the principal use of gravity models?