When There Are External Economies of Scale, an Increase in the Size

question 24

Multiple Choice

When there are external economies of scale, an increase in the size of the market will

• A) not affect the number of firms, but will lower the price per unit.
• B) decrease the number of firms and lower the price per unit.
• C) decrease the number of firms and raise the price per unit.
• D) increase the number of firms and raise the price per unit.
• E) increase the number of firms and lower the price per unit.

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Definitions:

Interest Earned

The profit gained from investing or saving, typically represented as a percentage of the original investment.

Compounded Quarterly

Interest calculation method where interest is added to the principal sum of a deposit or loan every quarter, influencing the amount in the next quarter.

Promissory Note

A monetary contract where one party commits to paying a distinct sum to another party, either on call or at a set date ahead.

Compounded Semi-Annually

Refers to the process where interest is added to the principal balance of an investment, loan, or deposit twice a year, leading to interest earning on interest previously accumulated.