Which of the following is FALSE?
A) Economies of scale may be internal, external, or both.
B) With internal economies of scale, the gains from trade include a wider selection of consumer choices and lower prices.
C) With external economies of scale, the gains from trade are less certain since, in theory, they can lock in production in a less efficient country and prevent the development of production in a more efficient country.
D) Internal economies of scale lead firms to regionally concentrate their industry.
D
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Compared to the long-run absolute elasticity of demand, the short-run absolute elasticity of demand is
A) smaller. B) the same. C) larger. D) either smaller or larger, depending on other factors.
Refer to the graph. Other things equal, a decrease in the price of a substitute resource would cause a:
A. move from a to b on D 1 .
B. shift from D 2 to D 3 assuming the output effect exceeds the substitution effect.
C. shift from D 3 to D 2 assuming the output effect exceeds the substitution effect.
D. move from b to a on D 1