1. If some industries exhibit internal economies of scale, we should not expect to see (a) monopolistic competition in these industries (b) perfect competition in these industries (c) inter-industry trade between countries. (d) intra-industry trade between countries. (e) None of the above

Question

Ernesto Zimmerman

Business

18 April, 03:36

1. If some industries exhibit internal economies of scale, we should not expect to see (a) monopolistic competition in these industries (b) perfect competition in these industries (c) inter-industry trade between countries. (d) intra-industry trade between countries. (e) None of the above

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Answers (1)

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Barbara · Answer 1

(b) perfect competition in these industries

Explanation:

If some industries exhibit internal economies of scale, we should not expect to see perfect competition in these industries because each firm behaves like a perfectly competitive firm and can thus be called a price taker. But when economies of scale are there because the firm itself increases its scale of production (i. e. it realizes internal economies of scale) the market structure becomes imperfectly competitive.