Question

42. In an industry where firms experience internal scale economies, we wong-run Ousu of production will depend on: A) individual firms' fixed costs. B) the size of the labor force. C) whether the country engages in intra-industry trade. D) the size of the market. E) whether the country engages in inter-industry trade. 43. In the model of monopolistic competition, if firms have average cost curves, then opening trade will the total number of firms and the average price. A) downward sloping; decrease; decrease B) downward sloping; decrease; increase. C) upward sloping; decrease; increase D) downward sloping; increase; decrease. E) upward sloping; increase; decrease. . In the model of monopolistic competition, if firms have _ average cost curves, then opening trade will cause firms to the industry. A) different; more efficient; enter. B) symmetric; less efficient; enter C) different; less efficient; exit. D) symmetric; less efficient; exit E) symmetric; more efficient; enter 45. . In the model of monopolistic competition, compared to a firm with a lower marginal cost, a firm with a higher marginal cost will set a_ price, produce output, and earn profits. A) higher; less; more B) higher; less; less. C) lower; less; less. D) lower; more; more. E) higher; more; more.

Answer 1

(42) (D) The size of the market

Long run costs are accumulated when firms change production level over time , responding to expected economic loss or profit. The land, labor, capital goods, entrepreneurship all vary to reach the long run cost of producing a good or service. When firms experience internal scale economies, the long run cost of production depends on the size of the market.

43) (A) downward sloping; decrease; decrease