In an Industry Where Firms Experience Internal Scale Economies,the Long-Run

question 24

Multiple Choice

In an industry where firms experience internal scale economies,the long-run cost of production will depend on

• A) the size of the market.
• B) the size of the labor force.
• C) whether the country engages in intra-industry trade.
• D) individual firms' fixed costs.
• E) whether the country engages in inter-industry trade.

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Definitions:

Fed

Short for the Federal Reserve, which is the central banking system of the United States, responsible for monetary policy.

Externalities

Costs or benefits that affect parties who did not choose to incur that cost or benefit, often leading to market failure if unaddressed.

Moral Hazard

A situation in which one party engages in risky behavior or lacks incentive to guard against risk because another party bears the consequences.

Moral Hazard

The situation in which one party can take risks because they know that they will not have to bear the full consequences of their actions.