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

a. imperfect competition

b. increasing returns to scale

c. intra-industry equilibrium

d. decreasing returns to scale

e. constant returns to scale

2. External economies of scale arise when the cost per unit...

a. ...falls as the industry grows larger.

b. ...rises as the industry grows larger and falls as the average firm grows larger

c. ...rises as the industry and the average firm grows larger

d. ...remains constant over a broader range of output.

e. ...falls as the regional economy grows larger.

3. Internal economies of scale arise when the cost per unit...

a. ...remains constant over a broad range of output

b. ...falls as the industry grows larger

c. ...rises as the industry grows larger

d. ...rises as the average firm grows larger

e. ...falls as the average firm grows larger

4. The existence of economies of scale:

a. cannot be associated with a perfectly competitive industry

b. focuses more on individual firms than the industry as a whole

c. tends to be one huge monopoly

d. tends to result in large profits for each firm

e. may be associated with a perfectly competitive industry

5. One advantage of the specialization that results from international trade is that countries can take advantage of:

a. smaller countries

b. scale economies

c. lower transport costs

d. scale economics

e. taste reversals

6. External economies of scale often arise because similar firms...

a. ...collude to fix prices and increase profits

b. ...have excellent internal logistics

c. ...agree to cooperate to expand global trade

d. ...have economies of scale in production

e. ...locate in the same geographic region

7. In the presence of external economies of scale, trade:

a. may or may not improve welfare in both countries

b. will unambiguously improve welfare in the exporting country and worsen welfare in the importing country

c. will unambiguously improve welfare in both countries

d. will unambiguously worsen welfare in the exporting country and improve welfare in the importing country. e. will unambiguously worsens welfare in both countries