Question

28 When there are external economies of scale, an increase in the size of the market will: A) not affect the number of firms, but will lower the price per unit. B) decrease the number of firms and lower the price per unit. C) decrease the number of firms and raise the price per unit. D) increase the number of firms and raise the price per unit. E) increase the number of firms and lower the price per unit. - If some industries exhibit internal increasing returns to scale in each country, we should not expect to see: A) intra-industry trade between countries. B) high levels of specialization in both countries. C) inter-industry trade between countries. D) perfect competition in these industries. E) increased productivity in both countries. _ External economies of scale will average cost when output is by A) reduce; increased; the industry B) reduce; increased; a firm. C) increase; increased; a firm D) increase; increased; the industry. E) reduce; reduce; the industry. Ir 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. A) higher; increase; 100%. B) higher; increase; 50%. C) lower; increase; 100%. D) lower; increase; 50% E) higher; decrease; 0%. 30. In the presence of external economies of scale, trade A) will unambiguously improve welfare in both countries. B) will unambiguously worsen welfare in the exporting country and improve welfare in the importing country. C) may or may not improve welfare in both countries. D) will unambiguously improve welfare in the exporting country and worsen welfare in the importing country. E) will unambiguously worsen welfare in both countries. 29.

Answer 1

Ans26) e) increase the number of firms and lower the price per unit.

Ans27) d) perfect competition in these industries.

Ans28) a) A) reduce; increased; the industry

Ans29) a) higher ; increase ; 100%

Ans30) c) may or may not improve welfare in both countries.