ECO 201 Chapter 7 Exam Questions and Answers Graded A+
A - Answers If a firm's output more than doubles when all inputs are doubled, production is said to occur
under conditions of
A) increasing returns to scale.
B) imperfect competition.
C) intra-industry equilibrium.
D) constant returns to scale
E) decreasing returns to scale.
A - Answers One advantage of the specialization that results from international trade is that countries
can take advantage of
A) scale economies.
B) production diversification
C) smaller countries.
D) taste reversals.
E) lower transport costs.
D - Answers If a firm's output doubles when all inputs are doubled, production is said to occur under
conditions of
A) increasing returns to scale.
B) imperfect competition.
C) intra-industry equilibrium.
D) constant returns to scale
E) decreasing returns to scale.
E - Answers If a firm's output less than doubles when all inputs are doubled, production is said to occur
under conditions of
A) increasing returns to scale.
B) imperfect competition.
C) intra-industry equilibrium.
, D) constant returns to scale
E) decreasing returns to scale.
A - Answers The existence of external economies of scale
A) may be associated with a perfectly competitive industry.
B) cannot be associated with a perfectly competitive industry.
C) tends to result in one huge monopoly.
D) tends to result in large profits for each firm.
E) focuses more on individual firms than the industry as a whole.
A - Answers The existence of internal economies of scale
A) cannot be associated with a perfectly competitive industry.
B) may be associated with a perfectly competitive industry.
C) is associated only with sophisticated products such as aircraft.
D) cannot form the basis for international trade.
E) focuses more on the industry than individual firms.
A - Answers When there are external economies of scale, an increase in the size of the market will
A) increase the number of firms and lower the price per unit.
B) increase the number of firms and raise the price per unit.
C) decrease the number of firms and raise the price per unit.
D) decrease the number of firms and lower the price per unit.
E) not affect the number of firms, but will lower the price per unit.
A - Answers If some industries exhibit internal increasing returns to scale in each country, we should not
expect to see
A) perfect competition in these industries.
B) intra-industry trade between countries.
C) inter-industry trade between countries.
D) high levels of specialization in both countries.
A - Answers If a firm's output more than doubles when all inputs are doubled, production is said to occur
under conditions of
A) increasing returns to scale.
B) imperfect competition.
C) intra-industry equilibrium.
D) constant returns to scale
E) decreasing returns to scale.
A - Answers One advantage of the specialization that results from international trade is that countries
can take advantage of
A) scale economies.
B) production diversification
C) smaller countries.
D) taste reversals.
E) lower transport costs.
D - Answers If a firm's output doubles when all inputs are doubled, production is said to occur under
conditions of
A) increasing returns to scale.
B) imperfect competition.
C) intra-industry equilibrium.
D) constant returns to scale
E) decreasing returns to scale.
E - Answers If a firm's output less than doubles when all inputs are doubled, production is said to occur
under conditions of
A) increasing returns to scale.
B) imperfect competition.
C) intra-industry equilibrium.
, D) constant returns to scale
E) decreasing returns to scale.
A - Answers The existence of external economies of scale
A) may be associated with a perfectly competitive industry.
B) cannot be associated with a perfectly competitive industry.
C) tends to result in one huge monopoly.
D) tends to result in large profits for each firm.
E) focuses more on individual firms than the industry as a whole.
A - Answers The existence of internal economies of scale
A) cannot be associated with a perfectly competitive industry.
B) may be associated with a perfectly competitive industry.
C) is associated only with sophisticated products such as aircraft.
D) cannot form the basis for international trade.
E) focuses more on the industry than individual firms.
A - Answers When there are external economies of scale, an increase in the size of the market will
A) increase the number of firms and lower the price per unit.
B) increase the number of firms and raise the price per unit.
C) decrease the number of firms and raise the price per unit.
D) decrease the number of firms and lower the price per unit.
E) not affect the number of firms, but will lower the price per unit.
A - Answers If some industries exhibit internal increasing returns to scale in each country, we should not
expect to see
A) perfect competition in these industries.
B) intra-industry trade between countries.
C) inter-industry trade between countries.
D) high levels of specialization in both countries.
