An industry is characterized by scale economies, and exists in two countries. Should these two countries engage in trade such that the combined market is supplied by one country's industry, then
A) consumers in both countries would have more varieties and lower prices.
B) consumers in both countries would have higher prices and fewer varieties.
C) consumers in the importing country only would have higher prices and fewer varieties.
D) consumers in the exporting country only would have higher prices and fewer varieties.
E) consumers in both countries would have fewer varieties at lower prices.
A
You might also like to view...
In the above figure, what factor might have caused the shift in the short-run Phillips curve from SRPC1 to SRPC2?
What will be an ideal response?
An example of the interaction term between two independent, continuous variables is
A) Yi = ?0 + ?1Xi + ?2Di + ?3(Xi × Di) + ui. B) Yi = ?0 + ?1X1i + ?2X2i + ui. C) Yi = ?0 + ?1D1i + ?2D2i + ?3 (D1i × D2i) + ui. D) Yi = ?0 + ?1X1i + ?2X2i + ?3(X1i × X2i) + ui.
With regard to the business cycle, most modern economists believe that
a. once a recession starts, market forces are incapable of preventing the economy from plunging deeper and deeper into a depression. b. market economies will experience lengthy periods of recession pretty much regardless of what policy makers do. c. the economy's self-corrective mechanism will quickly restore full employment regardless of the choices made by policy makers. d. lower real interest rates and reductions in real resource prices will help direct an economy out of recession.
A reduction in the real interest rate will increase investment spending, other things equal, because firms will make an investment purchase if the expected return is
What will be an ideal response?