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

a. perfect distribution

b.constant returns to scale

c. decreasing returns to scale

d. inter-industry equilibrium

e. increasing returns to scale

2. A product is produced in a monopolistically competitive industry. If this industry exists in two countries, and these two countries engage in trade with each other, then we would expect:

a. the country in which the price of the product is higher will export the product

b. the countries will trade only with other nations they are not in competition with

c. the country with a relative abundance of the factor of production in which production of the product is intensive will export this product

d. each country will export different varieties of the product to the other

e. neither country will export the product since there is no comparative advantage

3. When a country both exports and imports a type of commodity, the country is engaged in:

a.

an attempt to monopolise the relevant industry

b.

intra-industry trade

c.

inter-industry trade

d.

increasing returns to scale

e.

the Ricardian Model

4. Where there are internal economies of scale, and a country (Home) engages in free trade with another country (Foreign), the scale of production possible at Home is constrained by the size of the:

a.

Home market

b.

third country markets not open to trade

c.

Home market, Foreign market, and third country markets not open to trade

d.

Home market plus the Foreign market

e.

Foreign market

5. The existence of internal economies of scale:

a.

is associated only with sophisticated products such as aircrafts

b.

focuses more on the industry than individual firms

c.

may beassociated with a perfectly competitive industry

d.

cannot be associated with a perfectly competitive industry

e.

cannot form the basis of international trade

6. Monopolistic competition is associated with:

a.

product homogenisation

b.product differentiation

c.

explicit consideration at the firm level of the strategic impact of other firms pricing decisions

d.

decreasing returns to scale

e.

price-taking behaviour

7. An industry is performing under monopolistically competitive conditions and exists in two countries. If these two countries engage in trade, then:

a.

consumers in both countries would have more varieties and lower prices

b.

consumers in the importing country only would have higher prices and fewer varieties

c.

consumers in both countries would have fewer varieties at lower prices

d.

consumers in the exporting country only would have higher prices and fewer varieties