tbch06 - Chapter 6: Economies of Scale, Imperfect...

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Chapter 6: Economies of Scale, Imperfect Competition, and International Trade 1. External economies of scale arise when the cost per unit A. rises as the industry grows larger. B. falls as the industry grows larger rises as the average firm grows larger. C. falls as the average firm grows larger. D. remains constant. E. None of the above. Answer: B 2. Internal economies of scale arise when the cost per unit A. rises as the industry grows larger. B. falls as the industry grows larger. C. rises as the average firm grows larger. D. falls as the average firm grows larger. E. None of the above. Answer: D 3. External economies of scale A. may be associated with a perfectly competitive industry. B. cannot be associated with a perfectly competitive industry. C. tends to result in one huge monopoly. D. tends to result in large profits for each firm. E. None of the above. Answer: A 4. Internal economies of scale A. may be associated with a perfectly competitive industry. B. cannot be associated with a perfectly competitive industry. C. are associated only with sophisticated products such as aircraft. D. cannot form the basis for international trade . E. None of the above. Answer: B 5. A monopolistic firm A. can sell as much as it wants for any price it determines in the market. B. cannot determine the price, which is determined by consumer demand. C. will never sell a product whose demand is inelastic at the quantity sold. D. cannot sell additional quantity unless it raises the price on each unit. E. None of the above. Answer: C 70
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6. Monopolistic competition is associated with A. cut-throat price competition. B. product differentiation. C. explicit consideration at firm level of the feedback effects of other firms' pricing decisions. D. high profit margins. E. None of the above. Answer: B 7. The most common market structure is A. perfect competition. B. monopolistic competition. C. small-group oligopoly. D. perfectly vertical integration. E. None of the above. Answer: C 8. Modeling trade in monopolistic industries is problematic because A. there is no one generally accepted model of oligopoly behavior. B. there are no models of oligopoly behavior. C. it is difficult to find an oligopoly in the real world. D. collusion among oligopolists makes usable data rare. E. None of the above. Answer: A 9. Where there are economies of scale, the scale of production possible in a country is constrained by A. the size of the country. B. the size of the trading partner's country. C. the size of the domestic market. D. the size of the domestic plus the foreign market. E. None of the above. Answer: D 10. Where there are economies of scale, an increase in the size of the market will A. increase the number of firms and raise the price per unit. B.
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This note was uploaded on 05/30/2011 for the course ECONOMICS 120 taught by Professor Dr.mohamed during the Spring '11 term at Faculty of English Commerce Ain Shams University.

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tbch06 - Chapter 6: Economies of Scale, Imperfect...

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