The Opportunity to Exploit Economies of Scale Is One of the Gains

question 7

Multiple Choice

The opportunity to exploit economies of scale is one of the gains to be derived by removing tariffs and other trade distortions. These gains will be the result of a decrease in

• A) world prices of imports.
• B) the consumption distortion loss triangle.
• C) the production distortion loss triangle.
• D) international labor mobility.
• E) excessive entry and inefficient business practices.

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Definitions:

Alternative Use

Refers to the potential other uses or applications of an asset or resource outside its current employment.

Variable Cost

Costs that vary directly with the level of production or sales volume.

Total Costs

The complete aggregate of expenses incurred by a business, encompassing both fixed and variable costs.

Differential Revenue

The difference in revenue between two alternative decisions or scenarios.