IE Homework 6 Questions

Which of the following goods or services would likely be subject to external economies of scale? (mark all that apply) A. Motion pictures B. Software tech-support services C. production of asphalt or concrete D. timber harvesting E. Cancer research

A. Motion pictures B. Software tech-support services E. Cancer research

External economies of scale A. are more likely to be associated with a perfectly competitive industry B. tend to result in large profits fro each firm and an industry with relatively few firms C. cannot be associated with a perfectly competitive industry D. lead to the creation of a single large monopoly

A. are more likely to be associated with a perfectly competitive industry

Where there are economies of scale, an increase in the size of the market will A. lead to more firms producing and selling in that market and lower the price per unit B. lead to fewer firms producing and selling in that market and raise the price per unit C. decrease the number of firms and leave the price per unit unchanged D. lead to more firms producing and selling in that market and raise the price per unit

A. lead to more firms producing and selling in that market and lower the price per unit

Which of the following good or services would likely be subject to dynamic increasing returns? (mark all that apply) A. motion pictures B. timber harvesting C. software tech-support services D. cancer research E. production of asphalt or concrete

A. motion pictures C. software tech-support services D. cancer research

What is a "forward-falling supply curve"? A. the supply curve of a perfectly competitive industry with external economies B. the supply curve of a monopolistically competitive industry with internal economies C. the supply curve of a monopolist engaged in dumping D. a supply curve describing reciprocal dumping E. the supply curve of a perfectly competitive industry with internal economies

A. the supply curve of a perfectly competitive industry with external economies

Internal economies of scale occur when the average costs A. rise as the representative firm grows larger B. fall as the representative firm grows larger C. rise for a given firm as the industry grows larger D. fall for a given firm as the industry grows larger

B. fall as the representative firm grows larger

Where there are economies of scale, the scale of production possible in a country is constrained by A. the size of that country B. the combined size of the domestic and foreign market C. the aggregate size of all trading partner countries D. the size of the domestic market

B. the combined size of the domestic and foreign market

External economies of scale occur when average costs A. fall as the representative from and industry grows larger B. rise as the industry grows larger C. fall as the industry grows larger but rise as the representative firm grows larger D. remain constant

C. fall as the industry grows larger but rise as the representative firm grows larger

Why do internal economies of scale lead to imperfectly competitive industries? A. there are barriers to entry due to large fixed costs B. this is an observation based on measurable data C. large firms have cost advantage over small firms D. patent laws prevent firms from entering the market

C. large firms have cost advantage over small firms

How do economies of scale give rise to international trade? A. international trade occurs because economies of scale transfer knowledge across countries B. international trade occurs because of multi-national corporations C. they enhance resource differences between countries D. international trade occurs because it increases the market size

D. international trade occurs because it increases the market size

Which of the following is not the reason for external economies of scale? A. specialized suppliers of intermediate goods B. knowledge spillovers C. labor market pooling D. large fixed costs

D. large fixed costs

Internal economies of scale A. may be associated with a perfectly competitive industry B. can never form the basis for international trade C. are associated only with high-tech or complex products such as robotics D. may be associated with imperfectly competitive industry

D. may be associated with imperfectly competitive industry