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IE Chapter 7

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Chapter 7
ulckapatel
Quiz by ulckapatel, updated more than 1 year ago
ulckapatel
Created by ulckapatel over 8 years ago
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Question 1

Question
If a firm's output more than doubles when all the inputs are doubled, production is said to occur under conditions of
Answer
  • increasing returns to scale.
  • imperfect competition.
  • intra-industry equilibrium.
  • constant returns to scale
  • decreasing returns to scale

Question 2

Question
One advantage of the specialization that results from international trade is that countries can take advantage of
Answer
  • scale economies
  • production diversification
  • smaller countries.
  • taste reversals.
  • lower transport costs.

Question 3

Question
If a firm's output doubles when all inputs are doubled, production is said to occur under conditions of
Answer
  • constant returns to scale
  • increasing returns to scale.
  • imperfect competition.
  • intra-industry equilibrium.
  • decreasing returns to scale.

Question 4

Question
If a firm's output less than doubles when all inputs are doubled, production is said to occur under conditions of
Answer
  • increasing returns to scale.
  • imperfect competition.
  • intra-industry equilibrium.
  • constant returns to scale
  • decreasing returns to scale

Question 5

Question
The existence of external economies of scale
Answer
  • 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.

Question 6

Question
The existence of internal economies of scale
Answer
  • 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.

Question 7

Question
When there are external economies of scale, an increase in the size of the market will
Answer
  • 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.

Question 8

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

Question 9

Question
External economies of scale arise when the cost per unit
Answer
  • 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.

Question 10

Question
Internal economies of scale arise when the cost per unit
Answer
  • 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

Question 11

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

Question 12

Question
Internal economies of scale will ______________________ average cost when output is __________ by ________________.
Answer
  • reduce; increased; a firm
  • increase; increased; a firm
  • reduce; increased; the industry
  • increase; increased; the industry
  • reduce; reduce; the industry

Question 13

Question
External economies of scale will ___________ average cost when output is _______________ by __________________.
Answer
  • reduce; increased; the industry
  • reduce; increased; a firm
  • increase; increased; a firm
  • increase; increased; the industry
  • reduce; reduce; the industry

Question 14

Question
External economies of scale often arise because similar firms
Answer
  • 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.

Question 15

Question
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
Answer
  • 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.

Question 16

Question
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 ________.
Answer
  • downward sloping; downward sloping
  • upward sloping; horizontal
  • horizontal; upward sloping
  • downward sloping; horizontal
  • upward sloping; downward sloping

Question 17

Question
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 ________.
Answer
  • decrease; decrease
  • increase; remain constant
  • remain constant; increase
  • decrease; remain constant
  • increase; decrease

Question 18

Question
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 ________.
Answer
  • downward sloping; downward sloping
  • upward sloping; horizontal
  • horizontal; downward sloping
  • downward sloping; horizontal
  • upward sloping; downward sloping

Question 19

Question
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 ________.
Answer
  • decrease; decrease
  • increase; remain constant
  • remain constant; increase
  • decrease; remain constant
  • increase; decrease

Question 20

Question
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 ________.
Answer
  • decrease; decrease
  • increase; remain constant
  • remain constant; increase
  • decrease; remain constant
  • increase; decrease

Question 21

Question
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
Answer
  • higher; increase; 100%
  • higher; increase; 50%
  • lower; increase; 100%
  • lower; increase; 50%
  • higher; decrease; 0%

Question 22

Question
In the presence of external economies of scale, trade
Answer
  • 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.

Question 23

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

Question 24

Question
The learning curve describes the ________ relationship between ________ and ________.
Answer
  • inverse; unit cost; cumulative output
  • direct; unit cost; cumulative output
  • inverse; education; annual income
  • direct; education; annual income
  • direct; education; labor productivity

Question 25

Question
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.
Answer
  • higher; increase; 100%
  • higher; increase; 50%
  • lower; increase; 100%
  • lower; increase; 50%
  • higher; decrease; 0%

Question 26

Question
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 ________.
Answer
  • nontraded; traded; external economies.
  • traded; nontraded; internal economies
  • nondurable; durable; natural resource
  • durable; nondurable; natural resources
  • consumer; style; population

Question 27

Question
The share of ________ goods in employment is ________ across the country. The share of ________ goods in employment is ________ across the country.
Answer
  • nontraded; uniform; traded; variable
  • traded; uniform; nontraded; variable
  • durable; uniform; nondurable; variable
  • nondurable; uniform; durable; variable
  • nontraded; variable; traded; uniform

Question 28

Question
Patterns of interregional trade are primarily determined by ________ rather than ________ because factors of production are generally ________.
Answer
  • external economies; natural resources; mobile
  • internal economies; external economies; mobile
  • external economies; population; immobile
  • internal economies; population; immobile
  • population; external economies; immobile

Question 29

Question
The primary determinant of patterns of interregional trade is
Answer
  • accidents of history.
  • resource allocations.
  • factor abundance.
  • weather.
  • centralized optimization.

Question 30

Question
The study of factors that influence both international and interregional trade is referred to as
Answer
  • accidents of history.
  • economic geography.
  • factor abundance theory.
  • weather analysis.
  • centralized optimization.
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