Question 1

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

Accepted Answer

In the presence of internal economies of scale, firms experience lower costs as they increase production, leading to a downward sloping supply curve. With external economies of scale, the industry's average costs decrease as the industry grows, also resulting in a downward sloping supply curve.

Question 2

The existence of internal economies of scale
A)is associated only with sophisticated products such as aircraft.
B)focuses more on the industry than individual firms.
C)cannot form the basis for international trade.
D)may be associated with a perfectly competitive industry.
E)cannot be associated with a perfectly competitive industry.

Accepted Answer

E

Question 3

Internal economies of scale arise when the cost per unit
A)falls as the industry grows larger.
B)falls as the average firm grows larger.
C)rises as the average firm grows larger.
D)rises as the industry grows larger.
E)remains constant over a broad range of output.

Accepted Answer

Internal economies of scale occur when a firm's average costs decrease as it increases its own production, leading to a larger firm size.

Question 4

External economies of scale will average cost when output is by .
A)increase; increased; the industry
B)reduce; reduce; the industry
C)reduce; increased; a firm
D)increase; increased; a firm
E)reduce; increased; the industry

Accepted Answer

External economies of scale occur when the average cost of production decreases as the industry output increases, benefiting all firms within the industry.

Question 5

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

Accepted Answer

A firm's long-run supply curve will be horizontal due to constant returns to scale internally, while the market supply curve will be downward sloping due to external economies of scale.

Question 6

If a firm's output less than doubles when all inputs are doubled,production is said to occur under conditions of
A)constant returns to scale
B)increasing returns to scale.
C)imperfect competition.
D)decreasing returns to scale.
E)intra- industry equilibrium.

Accepted Answer

When a firm's output less than doubles as all inputs are doubled, it is experiencing decreasing returns to scale, meaning that the proportional increase in inputs results in a less than proportional increase in output.

Question 7

One advantage of the specialization that results from international trade is that countries can take advantage of
A)smaller countries.
B)production diversification
C)scale economies.
D)taste reversals.
E)lower transport costs.

Accepted Answer

Specialization allows countries to produce goods more efficiently and at a larger scale, leading to economies of scale, which reduces costs and increases output.

Question 8

Internal economies of scale will average cost when output is by .
A)reduce; increased; the industry
B)reduce; increased; a firm
C)reduce; reduce; the industry
D)increase; increased; the industry
E)increase; increased; a firm

Accepted Answer

Internal economies of scale occur when a firm's average costs decrease as its output increases, due to factors like improved efficiency or bulk purchasing.

Question 9

If output is increased in the long run,average production costs in the presence of internal diseconomies of scale will ,and in the presence of external diseconomies of scale,will .
A)decrease; remain constant
B)increase; decrease
C)remain constant; increase
D)increase; remain constant
E)decrease; decrease

Accepted Answer

The answer of If output is increased in the long...

Question 10

External economies of scale often arise because similar firms
A)locate in the same geographic region.
B)have excellent internal logistics.
C)agree to cooperate to expand global trade.
D)collude to fix prices and increase profits.
E)have economies of scale in production.

Accepted Answer

External economies of scale occur when firms benefit from factors outside their control, such as being located in a region with a concentration of similar firms, which can lead to shared resources, skilled labor, and knowledge spillovers.

Question 11

When there are external economies of scale,an increase in the size of the market will
A)decrease the number of firms and lower the price per unit.
B)increase the number of firms and lower the price per unit.
C)increase the number of firms and raise the price per unit.
D)not affect the number of firms,but will lower the price per unit.
E)decrease the number of firms and raise the price per unit.

Accepted Answer

External economies of scale mean that as the industry grows, costs per unit decrease, encouraging more firms to enter the market and leading to lower prices.

Question 12

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

Accepted Answer

External economies of scale occur when businesses benefit from factors outside their control, such as improved infrastructure or a skilled labor pool, which can be facilitated by virtual economic communities.

Question 13

If a firm's output doubles when all inputs are doubled,production is said to occur under conditions of
A)decreasing returns to scale.
B)increasing returns to scale.
C)intra- industry equilibrium.
D)constant returns to scale
E)imperfect competition.

Accepted Answer

When a firm's output doubles as all inputs are doubled, it is experiencing constant returns to scale, meaning the output increases proportionally with the increase in inputs.

Question 14

Where there are internal economies of scale,the scale of production possible in a country is constrained by
A)the size of the domestic market.
B)the size of the country.
C)the size of the trading partner's country.
D)the size of the foreign market.
E)the size of the domestic plus the foreign market.

Accepted Answer

The answer of Where there are internal economies of scale,the...

Question 15

External economies of scale arise when the cost per unit
A)falls as the industry and the average firm grows larger.
B)remains constant over a broad range of output.
C)rises as the industry and the average firm grows larger.
D)rises as the industry grows larger and falls as the average firm grows larger.
E)falls as the industry grows larger and rises as the average firm grows larger.

Accepted Answer

The answer of External economies of scale arise when the...

Question 16

The existence of external economies of scale
A)cannot be associated with a perfectly competitive industry.
B)tends to result in one huge monopoly.
C)focuses more on individual firms than the industry as a whole.
D)may be associated with a perfectly competitive industry.
E)tends to result in large profits for each firm.

Accepted Answer

External economies of scale can occur in a perfectly competitive industry when the industry's expansion leads to cost advantages for all firms, such as through shared suppliers or improved infrastructure.

Question 17

If output is increased in the long run,average production costs in the presence of internal economies of scale will _ ,and in the presence of external economies of scale,will .
A)increase; remain constant
B)decrease; remain constant
C)decrease; decrease
D)remain constant; increase
E)increase; decrease

Accepted Answer

In the presence of internal economies of scale, average production costs decrease as output increases due to efficiencies gained within the firm. With external economies of scale, average costs decrease as the industry grows, benefiting all firms.

Question 18

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 .
A)decrease; decrease
B)increase; decrease
C)remain constant; increase
D)increase; remain constant
E)decrease; remain constant

Accepted Answer

The answer of If output is increased in the long...

Question 19

If a firm's output more than doubles when all inputs are doubled,production is said to occur under conditions of
A)increasing returns to scale.
B)constant returns to scale
C)imperfect competition.
D)decreasing returns to scale.
E)intra- industry equilibrium.

Accepted Answer

Increasing returns to scale occur when a firm's output more than doubles as a result of doubling all inputs, indicating that the firm is becoming more efficient as it scales up production.

Question 20

If some industries exhibit internal increasing returns to scale in each country,we should not expect to see
A)high levels of specialization in both countries.
B)increased productivity in both countries.
C)inter- industry trade between countries.
D)intra- industry trade between countries.
E)perfect competition in these industries.

Accepted Answer

Internal increasing returns to scale often lead to imperfect competition because firms can lower their average costs by increasing production, which can result in fewer firms dominating the market.

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

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 .

The existence of internal economies of scale

Internal economies of scale arise when the cost per unit

External economies of scale will average cost when output is 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 a firm's output less than doubles when all inputs are doubled,production is said to occur under conditions of

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

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

If output is increased in the long run,average production costs in the presence of internal diseconomies of scale will ,and in the presence of external diseconomies of scale,will .

External economies of scale often arise because similar firms

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

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

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

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

External economies of scale arise when the cost per unit

The existence of external economies of scale

If output is increased in the long run,average production costs in the presence of internal economies of scale will _ ,and in the presence of external economies of scale,will .

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

If some industries exhibit internal increasing returns to scale in each country,we should not expect to see