1. The cross-boarder exchange of component parts is a major aspect of inter-industry trade in different goods and services.
a. True
b. False
2. The flow of cross-border trade in components results from horizontal foreign direct investment and tends to produce more trade between nations.
a. True
b. False
3. The minimum efficient scale of production for a firm is that point or range on the long-run average cost curve where economies of scale forces are exactly offset by diseconomies of scale forces, which may be impossible to attain if a firm is operating in a small country and does not have access to the global market place.
a. True
b. False
4. Because consumers have many choices in a globally monopolistic market they tend to be sensitive to price changes which causes firms to compete by lowering prices.
a. True
b. False
5. If a few firms have no global competition from imports they can raise their prices and restrict output and thereby increase the number of jobs they will want to create.
a. True
b. False
6. Industrial organization is the study of the market structures in which firms compete, and these structures may influence the nature of trade flows.
a. True
b. False
7. Defining the scope of a "market" makes it difficult to determine if a firm is large enough to be able to exert upward pressure on price and thereby enhance its revenues.
a. True
b. False
8. Concentration ratios give a clear-cut answer as to how large a firm should be within a given industry.
a. True
b. False
9. Profits being made in a monopolistic industry are unlikely to be reduced by other firms because they have no incentive to enter the industry.
a. True
b. False
10. If a government errects barriers to market entry within an industry and protects that industry from trade, consumers are likely to be better off because prices are sure to fall.
a. True
b. False