When the average cost of a typical firm declines as the output of the industry within a geographic area increases it is referred to as
A. external scale economies.
B. internal scale diseconomies.
C. internal scale economies.
D. constant returns to scale.
Answer: A
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If an incumbent faces an identical potential entrant with no costs of entry, the incumbent will
A) produce the Cournot duopolist level of output. B) produce the Stackelberg leader level of output. C) set price equal to marginal cost. D) shut down.
Gift shops in a small town sell identical mugs to tourists. However, tourists don't have enough time to check out the prices one by one and don't have brochures listing prices of mugs. We can conclude
A) the market for mugs is perfectly competitive. B) buyers have full information. C) sellers are price takers. D) the market is not perfectly competitive.
Fiscal policy can also contribute to___________________.
a. unemployment b. pollution c. inflation d. global warming
An assumption an economist might make while studying international trade is
a. there are only two countries. b. countries only produce two goods. c. technology does not change. d. All of the above are possible assumptions.