INT ECON FINAL

An imperfectly competitive firm has the following total cost curve: C=100+4Q. What is the average total cost equal to when Q=10?

14

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

Constant returns of scale

An imperfectly competitive firm has the following total cost curve: C=100+4Q. What is marginal cost equal to when Q=10?

MC=4

It is possible for an equilibrium that is consistent with purely competitive conditions (zero profits) to arise in an industry with positive scale of economies

True

Under the model of monopolistic competition, an increase in the number of firms in the industry will cause ________ to ________. (assuming nothing else changes just n)

average price; decrease

An industry is characterized by scale economies, and exists in two countries. Should these two countries engage in trade, then

consumers in both countries would have more varieties and lower prices

If a firm increases its output and average costs ____, then the firm is experiencing _____ of scale

decrease; increasing economies

A lower tariff on imported steel would most likely benefit...

domestic consumers of steel

the efficiency case made for free trade is that as trade distortions such as tariffs are dismantled and removed

efficiency losses for producers and consumers will decrease, hence increasing national economic welfare

The opportunity to exploit economies of scale is one of the gains to be made from removing tariffs and other trade distortions. These gains will be found by a decrease in

excessive entry and inefficient business practices

The imposition of tariffs will help a nation attain which of the following goals?

gains for domestic producers

An important difference between tariffs and quotas is that tariffs

generate tax revenue for the government

Ad valorem tariffs are

import taxes calculated as a fraction of the value of the imported goods

A voluntary export restraint will ___ producer surplus, ___ consumer surplus, and ___ government revenue (from the perspective of the importing country)

increase; decrease; have no effect on

What is a TRUE statement concerning the imposition in the US of a tariff on cheese

it raises revenue for the government

If there are a large number of firms in a monopolistically competitive industry

long-run profit will be equal to zero

If a firm that uses a production process that yields economies of scale charges (for example, a monopolist), a price equal to ___, then profit will be ___.

marginal cost; negative

The existence of external economies of scale...

may be associated with a perfectly competitive industry.

If the size of the market for products produced by firms in a monopolistically competitive industry becomes LARGER, then there will be ____ firms at home and each firm will produce ____ output and charge a ____ price

more; more; lower

the optimum tariff is

not practical for a large country due to the likelihood of retaliation

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

perfect competition in these industries

Monopolistic competition is associated with

product differentiation

If a good is imported into (large) country H from country F, then the imposition of a tariff in country H

raises the price of the good in H and lowers it in F

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

reduced; increased; a firm

The difficulty of ascertaining the right second-best trade policy to follow

reinforces support for free-trade options

Imperfectly competitive firms (such as a monopolist) have a demand curve that ___ and a marginal revenue curve that ___ and is ___ the demand curve.

slopes downward; slopes downward; below

A tax of 20 cents per unity of imported garlic is an example of a(n)

specific tariff

The change in the economic welfare of a country associated with an increase in a tariff equals

terms of trade gain - efficiency loss E - (B+D)

Once the two countries decide to trade, we can find the world equilibrium price by setting (if the world is composed of these two countries only)

the import demand curve (derived from the home market) equal to the export supply curve (derived from the foreign market)