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Chapter 7

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IE Chapter 7

Question 1 of 30

1

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

Select one of the following:

  • increasing returns to scale.

  • imperfect competition.

  • intra-industry equilibrium.

  • constant returns to scale

  • decreasing returns to scale

Explanation

Question 2 of 30

1

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

Select one of the following:

  • scale economies

  • production diversification

  • smaller countries.

  • taste reversals.

  • lower transport costs.

Explanation

Question 3 of 30

1

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

Select one of the following:

  • constant returns to scale

  • increasing returns to scale.

  • imperfect competition.

  • intra-industry equilibrium.

  • decreasing returns to scale.

Explanation

Question 4 of 30

1

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

Select one of the following:

  • increasing returns to scale.

  • imperfect competition.

  • intra-industry equilibrium.

  • constant returns to scale

  • decreasing returns to scale

Explanation

Question 5 of 30

1

The existence of external economies of scale

Select one of the following:

  • 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.

  • focuses more on individual firms than the industry as a whole.

Explanation

Question 6 of 30

1

The existence of internal economies of scale

Select one of the following:

  • cannot be associated with a perfectly competitive industry

  • may be associated with a perfectly competitive industry.

  • is associated only with sophisticated products such as aircraft.

  • cannot form the basis for international trade.

  • focuses more on the industry than individual firms.

Explanation

Question 7 of 30

1

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

Select one of the following:

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

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

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

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

  • not affect the number of firms, but will lower the price per unit.

Explanation

Question 8 of 30

1

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

Select one of the following:

  • perfect competition in these industries

  • intra-industry trade between countries.

  • inter-industry trade between countries.

  • high levels of specialization in both countries.

  • increased productivity in both countries.

Explanation

Question 9 of 30

1

External economies of scale arise when the cost per unit

Select one of the following:

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

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

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

  • remains constant over a broad range of output.

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

Explanation

Question 10 of 30

1

Internal economies of scale arise when the cost per unit

Select one of the following:

  • falls as the average firm grows larger.

  • rises as the industry grows larger.

  • falls as the industry grows larger.

  • rises as the average firm grows larger.

  • remains constant over a broad range of output

Explanation

Question 11 of 30

1

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

Select one of the following:

  • the size of the domestic plus the foreign market

  • the size of the country.

  • the size of the trading partner's country.

  • the size of the domestic market.

  • the size of the foreign market.

Explanation

Question 12 of 30

1

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

Select one of the following:

  • reduce; increased; a firm

  • increase; increased; a firm

  • reduce; increased; the industry

  • increase; increased; the industry

  • reduce; reduce; the industry

Explanation

Question 13 of 30

1

External economies of scale will ___________ average cost when output is _______________ by __________________.

Select one of the following:

  • reduce; increased; the industry

  • reduce; increased; a firm

  • increase; increased; a firm

  • increase; increased; the industry

  • reduce; reduce; the industry

Explanation

Question 14 of 30

1

External economies of scale often arise because similar firms

Select one of the following:

  • locate in the same geographic region

  • collude to fix prices and increase profits.

  • have excellent internal logistics.

  • agree to cooperate to expand global trade.

  • have economies of scale in production.

Explanation

Question 15 of 30

1

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

Select one of the following:

  • external economies of scale

  • internal economies of scale.

  • consolidation of industries into a small number of powerful firms.

  • suppression of innovations and collusive behavior, driving up prices.

  • government intervention and regulation.

Explanation

Question 16 of 30

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 ________.

Select one of the following:

  • downward sloping; downward sloping

  • upward sloping; horizontal

  • horizontal; upward sloping

  • downward sloping; horizontal

  • upward sloping; downward sloping

Explanation

Question 17 of 30

1

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 ________.

Select one of the following:

  • decrease; decrease

  • increase; remain constant

  • remain constant; increase

  • decrease; remain constant

  • increase; decrease

Explanation

Question 18 of 30

1

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 ________.

Select one of the following:

  • downward sloping; downward sloping

  • upward sloping; horizontal

  • horizontal; downward sloping

  • downward sloping; horizontal

  • upward sloping; downward sloping

Explanation

Question 19 of 30

1

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 ________.

Select one of the following:

  • decrease; decrease

  • increase; remain constant

  • remain constant; increase

  • decrease; remain constant

  • increase; decrease

Explanation

Question 20 of 30

1

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 ________.

Select one of the following:

  • decrease; decrease

  • increase; remain constant

  • remain constant; increase

  • decrease; remain constant

  • increase; decrease

Explanation

Question 21 of 30

1

If two countries begin trade and both produce a product subject to external economies of scale, then the country with the ________ rate of production will ________ production until it controls ________ of the market

Select one of the following:

  • higher; increase; 100%

  • higher; increase; 50%

  • lower; increase; 100%

  • lower; increase; 50%

  • higher; decrease; 0%

Explanation

Question 22 of 30

1

In the presence of external economies of scale, trade

Select one of the following:

  • may or may not improve welfare in both countries.

  • will unambiguously improves welfare in both countries.

  • will unambiguously worsens welfare in both countries.

  • will unambiguously worsen welfare in the exporting country and improve welfare in the importing country.

  • will unambiguously improve welfare in the exporting country and worsen welfare in the importing country.

Explanation

Question 23 of 30

1

A learning curve relates ________ to ________ and is a case of ________ returns.

Select one of the following:

  • unit cost; cumulative production; dynamic increasing returns

  • output per time period; long-run marginal cost; dynamic increasing returns

  • unit cost; cumulative production; dynamic decreasing returns

  • output per time period; long-run marginal cost; dynamic decreasing returns

  • labor productivity; education; increasing marginal returns

Explanation

Question 24 of 30

1

The learning curve describes the ________ relationship between ________ and ________.

Select one of the following:

  • inverse; unit cost; cumulative output

  • direct; unit cost; cumulative output

  • inverse; education; annual income

  • direct; education; annual income

  • direct; education; labor productivity

Explanation

Question 25 of 30

1

If two countries begin trade and both produce a product subject to internal economies of scale, then the country with the ________ rate of production will ________ production until it controls ________ of the market.

Select one of the following:

  • higher; increase; 100%

  • higher; increase; 50%

  • lower; increase; 100%

  • lower; increase; 50%

  • higher; decrease; 0%

Explanation

Question 26 of 30

1

Restaurant meals are an example of a ________ good and clothing is an example of a ________ good. The pattern of interregional trade is determined primarily by ________.

Select one of the following:

  • nontraded; traded; external economies.

  • traded; nontraded; internal economies

  • nondurable; durable; natural resource

  • durable; nondurable; natural resources

  • consumer; style; population

Explanation

Question 27 of 30

1

The share of ________ goods in employment is ________ across the country. The share of ________ goods in employment is ________ across the country.

Select one of the following:

  • nontraded; uniform; traded; variable

  • traded; uniform; nontraded; variable

  • durable; uniform; nondurable; variable

  • nondurable; uniform; durable; variable

  • nontraded; variable; traded; uniform

Explanation

Question 28 of 30

1

Patterns of interregional trade are primarily determined by ________ rather than ________ because factors of production are generally ________.

Select one of the following:

  • external economies; natural resources; mobile

  • internal economies; external economies; mobile

  • external economies; population; immobile

  • internal economies; population; immobile

  • population; external economies; immobile

Explanation

Question 29 of 30

1

The primary determinant of patterns of interregional trade is

Select one of the following:

  • accidents of history.

  • resource allocations.

  • factor abundance.

  • weather.

  • centralized optimization.

Explanation

Question 30 of 30

1

The study of factors that influence both international and interregional trade is referred to as

Select one of the following:

  • accidents of history.

  • economic geography.

  • factor abundance theory.

  • weather analysis.

  • centralized optimization.

Explanation

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