If There Are Increasing Returns to Scale, Then It Makes

question 33

Multiple Choice

If there are increasing returns to scale, then it makes sense to consolidate operations into one production facility

• A)if production above domestic demand can be exported.
• B)only if the consolidation creates an absolute advantage versus other trading partners.
• C)if the government subsidizes production.
• D)Never, because then you lose the possibility of comparative advantage gains between the production facilities.

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Definitions:

Domestic Economy

The economy encompassing all economic activities within a country's borders.

Foreign Economies

The economic systems and markets outside of a country's own borders.

Parity Ratio

A measure used to compare the value of one form of a commodity (e.g., agricultural produce) to another, often with respect to trade or exchange rates.

Indices

Statistical measures that track changes in a representative group of individual data points, often used to assess economic and financial performance.