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:

Elastic

Describes a situation where the quantity demanded or supplied of a good or service significantly changes in response to a change in price.

Price Elasticity of Supply

A measure of how much the quantity supplied of a good responds to a change in the price of that good, with higher elasticity indicating greater responsiveness.

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price over a specified period of time.

"Just Say No"

A slogan popularized during the Reagan administration to discourage children and teens from engaging in illegal drug use.