Question
In: Economics
(8 marks) Suppose that cars are an external economies of scale good. Imagine that the US...
- Suppose that cars are an external economies of scale good. Imagine that the US has an initial (head start) advantage in car production. Mexico has not produced any cars, but is considering entering the car industry. Despite the US’s initial advantage in car production, Mexico is able to enter car production and eventually becomes the world’s only producer of cars. Draw a diagram with a forward falling supply curve for each country (and any other curves you may need) that illustrates this scenario, and briefly explain using words.
Solutions
Rahul Sunny answered 6 months agoRelated Solutions
This question deals with external economies of scale. a) How does external economies of scale potentially...
This question deals with external economies of scale.
a) How does external economies of scale potentially justify
infant industry protection? Use a diagram to help you answer
this.
b) Suppose that Germany and India can both produce shirts, but
India has a lower average cost curve. Germany has the head start in
world production of shirts, beginning as the world's only supplier
of shirts. Even though Germany has the head start advantage, India
can still enter production of shirts. Draw...
Suppose there exists external economies of scale in an industry located in country X. If country...
Suppose there exists external economies of scale in an industry
located in country X. If country X moves from free trade to
autarky, it necessarily loses welfare. Explain in detail,
using any relevant diagrams, whether the above
statement is true, false or uncertain.
Suppose there exists external economies of scale in an industry located in country X. If country...
Suppose there exists external economies of scale in an industry
located in country X. If country X moves from free trade to
autarky, it necessarily loses welfare. Explain in detail, using any
relevant diagrams, whether the above statement is true, false or
uncertain.
Trade in the presence of external scale economies leads to prices that are lower than the...
Trade in the presence of external scale economies leads
to prices that are lower than the prices in only one of the trading
partners before trade. True or False? Justify your answer with an
appropriate diagram
A. Explain what external and internal economies of scale are and why the supply curve in...
A. Explain what external and internal economies of scale are and
why the supply curve in their case is shaped as “forward-falling”.
B. What may cause one country to have an initial advantage from
having a lower price? Discuss and give an example. C. Define what
increasing returns to scale represents in the context of a
production function. D. Can trade hurt a country when there are
external economies of scale? Give an example with a 2-country
2-good model and...
3. Briefly explain the difference between external and internal economies of scale. Why is it that...
3. Briefly explain the difference between external and internal
economies of scale. Why is it that if an industry is operating
under conditions of internal scale economies then we cannot have
perfect competition?
4. State one factor which may lead to external economies of
scale.
Consider the classical model, standard model, the models with external economies of scale, the model with...
Consider the classical model, standard model, the models with
external economies of scale, the model with external and internal
economies of scale (heterogenous firms). Assume that there are only
two countries and two products in this model.
A) List the models that predict that world prices are going to
be less than autarky prices should countries in our model open up
to trade
B) List the models that predict that trade would lead to a
productivity gain. Make sure that...
How can regional concentration of firms in an industry lead to external economies of scale? Give...
How can regional concentration of firms in an industry lead to
external economies of scale? Give examples of these types of
industrial clusters in the United States. Are they always
beneficial?
Do you think that Disney has grown from internal or external economies of scale? Assuming that...
Do you think that Disney has grown from internal or external
economies of scale?
Assuming that Disney is similar to other multinationals what do
you conclude when you read about the slow economic growth rate in
the U.S. compared with the growth rate of the multinationals of the
past few decades? What about wage growth rate?
a) Two methods of measuring economies of scale ( 20 marks) b) Three factors that determine...
a) Two methods of measuring economies of scale ( 20
marks)
b) Three factors that determine the degree of market
concentration ( 20 marks)
c) The relationship between concentration and market
performance ( 20 marks)
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