Which of the Following Statements About an Increasing-Returns-To-Scale Industry Is

question 26

Multiple Choice

Which of the following statements about an increasing-returns-to-scale industry is not true?

• A)It will tend to concentrate production in the hands of a very few large firms.
• B)Firms in the industry face higher costs per unit of production as their level of output increases.
• C)Opportunity costs may fall with the level of output.
• D)Proponents of strategic trade policy contend that tariffs can be used to stimulate production by a domestic industry capable of achieving increasing returns to scale.
• E)The costs of producing a unit of output fall as more output is produced.

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Definitions:

Budget Deficit

A budget deficit happens when a government's expenditures surpass its revenues within a given fiscal period.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Net Capital Outflow

Refers to the difference between the purchase of foreign assets by domestic residents and the purchase of domestic assets by foreigners. A positive net capital outflow means a country is investing more abroad than others are investing in it.

Open-Economy Macroeconomic Model

A framework for analyzing economies that engage in international trade, highlighting how these economies interact with the rest of the world economically.