When External Scale Economies Exist in an Industry, Which of the Following

question 15

Multiple Choice

When external scale economies exist in an industry, which of the following groups is most likely to be left worse off after the opening of free trade?

• A)Consumers in the importing country
• B)Producers in the importing country
• C)Consumers in the exporting country
• D)Producers in the exporting country

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Definitions:

Purchasing

The process of obtaining goods or services, usually for business purposes.

Cost Drivers

Factors that cause a change in the cost of an activity, impacting the economic amount associated with production or delivery of a service.

Variable Costs

Costs that vary in direct proportion to changes in production or sales volumes, such as raw materials and direct labor.

Fixed Costs

Costs that do not change with the level of output or production, such as rent, salaries, and insurance.