Question : 8.2   Monopolistic Competition and Trade 1) Intra-industry trade most common in : 1303522

 

8.2   Monopolistic Competition and Trade

 

1) Intra-industry trade is most common in the trade patterns of

A) the industrial countries of Western Europe.

B) the developing countries of Asia and Africa.

C) raw material producers.

D) China with the rest of the world.

E) labor-intensive products.

 

 

2) If the market for products produced by firms in a monopolistically competitive industry becomes ________, then there will be ________ firms and each firm will produce ________ output and charge a ________ price.

A) larger; more; more; lower

B) larger; fewer; more; lower

C) larger; fewer; more; higher

D) larger; more; more; higher

E) larger; more; less; higher

 

 

3) International trade based on external scale economies in both countries is likely to be carried out by

A) a relatively large number of price competing firms.

B) a relatively small number of price competing firms.

C) a relatively small number of imperfect competitors.

D) monopolists in each country.

E) a large number of oligopolists in each country.

 

 

4) International trade based solely on internal scale economies in both countries is likely to be carried out by

A) monopolists in each country.

B) a relatively large number of price competing firms.

C) a relatively small number of price competing firms.

D) a relatively small number of imperfect competitors.

E) a large number of oligopolists in each country.

 

5) A monopoly firm engaged in international trade will

A) equate marginal costs with marginal revenues in both domestic and foreign markets.

B) equate average to local costs.

C) equate marginal costs with foreign marginal revenues.

D) equate marginal costs with the highest price the market will bear.

E) equate marginal costs with the relative world prices.

 

 

6) A monopoly firm will maximize profits by producing where

A) marginal revenue is the same in domestic and foreign markets.

B) prices are the same in domestic and foreign markets.

C) marginal revenue is higher in foreign markets.

D) marginal revenue is higher in the domestic market.

E) total revenue from domestic and foreign sales is maximized.

 

 

7) A firm in long-run equilibrium under monopolistic competition will earn

A) zero economic profits because of free entry.

B) positive monopoly profits because each sells a differentiated product.

C) positive oligopoly profits because each firm sells a differentiated product.

D) negative economic profits because it has economies of scale.

E) positive economic profit if it engages in international trade.

 

 

8) 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.

 

 

9) An industry is characterized by scale economies and exists in two countries. In order for consumers of its products to enjoy both lower prices and more variety of choice

A) the two countries must engage in international trade with each other.

B) each country’s marginal cost must equal that of the other country.

C) the marginal cost of this industry must equal marginal revenue in the other.

D) the monopoly must lower prices in order to sell more.

E) they must combine to become a multinational corporation.

 

10) A product is produced in a monopolistically competitive industry with scale economies. If this industry exists in two countries, and these two countries engage in trade with each other, then we would expect

A) each country will export different varieties of the product to the other.

B) the country in which the price of the product is lower will export the product.

C) the country with a relative abundance of the factor of production in which production of the product is intensive will export this product.

D) neither country will export this product since there is no comparative advantage.

E) the countries will trade only with other nations they are not in competition with.