1. If a firm's output more than doubles when all inputs are doubled, production is said to occur under conditions of A. intra-industry equilibrium. B. decreasing returns to scale. C. imperfect competition. D. increasing returns to scale. E. constant returns to scale. 2. External economies of scale will ________ average cost when output is ________ by ______. A. reduce; increased; the industry B. reduce; increased; a firm C. increase; increased; a firm D. increase; increased; the industry E. reduce; reduce; the industry 3. The existence of internal economies of scale A. may be associated with a perfectly competitive industry. B. is associated only with sophisticated products such as aircraft. C. cannot be associated with a perfectly competitive industry. D. cannot form the basis for international trade. E. focuses more on the industry than individual firms 4. When there are external economies of scale, an increase in the size of the market should 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. 5. If an industry is subject to external economies of scale but not internal economies of scale, the average cost per unit A. rises as the industry and the average firm grows larger. B. remains constant over a broad range of output. C. falls as the industry and the average firm grows larger. D. falls as the industry grows larger and rises as the average firm grows larger. E. rises as the industry grows larger and falls as the average firm grows larger. 6. The Internet has made transactions between businesses (B2B trading) fast and easy. Any business in any location can access specialized knowledge, labor, and materials. It is likely that these virtual economic communities will result in A. consolidation of industries into a small number of powerful firms. B. internal economies of scale. C. suppression of innovations and collusive behavior, driving up prices. D. government intervention and regulation. E. external economies of scale 7. If two countries begin trading with one another, and both produce a product subject to external economies of scale, then the country with the ________ rate of production will ________ production until it controls ________ of the market. A. higher; increase; 100% B. higher; increase; 50% C. lower; increase; 100% D. lower; increase; 50% E. higher; decrease; 0% 8. A learning curve relates ________ to ________ and is a case of ________ returns. A. unit cost; cumulative production; dynamic increasing B. output per time period; long-run marginal cost; dynamic decreasing C. output per time period; long-run marginal cost; dynamic increasing D. unit cost; cumulative production; dynamic decreasing E. labor producti