According to the Standard Competitive Model,industries with Increasing Returns Would

question 63

Multiple Choice

According to the standard competitive model,industries with increasing returns would not be profitable.However,economist Paul Romer argues that many industries may be experiencing increasing returns because

• A) many important inputs are common property and therefore equally available to all firms.
• B) many important inputs may be nonrivalrous so that there is no limit to how much they can be used.
• C) of a decline in the number of monopsonistic firms in labor markets.
• D) of an increase in the number of firms that are natural monopolies.

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