Exam 8: Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

An industry is characterized by scale economies, and exists in two countries. Should these two countries engage in trade such that the combined market is supplied by one country's industry, then

Modeling trade in imperfectly competitive industries is problematic because

-The figure above represents the demand and cost functions facing a Brazilian steel producing monopolist. If it were unable to export, and was constrained by its domestic market, what quantity would it sell at what price?

When a multinational affiliate replicates production in a foreign country it is called ________ foreign direct investment.

When a multinational affiliate replicates elements of a production process in a foreign country it is called ________ foreign direct investment.

Monopolistic competition is associated with

When a country both exports and imports a type of commodity, the country is engaged in

In the model of monopolistic competition, an increase in industry output will cause individual firms' demand curves to become ________, which will ________ demand for higher-priced goods and ________ demand for lower-priced goods.

In the model of monopolistic competition, an increase in industry output will ________ market shares and ________ profits of producers of higher-priced goods and will ________ market shares and ________ profits of producers of lower-priced goods.

Imagine scale economies were not only external to firms, but were also external to individual countries. That is, the larger the worldwide industry (regardless of where firms or plants are located), the cheaper would be the per-unit cost of production. Describe what world trade would look like in this case.

Intra-industry trade is most common in the trade patterns of

If a firm increases its output in the ________ and unit costs ________, then the firm is experiencing ________ of scale.

If an industry is imperfectly competitive, and markets are segmented then

If there are a large number of firms in a monopolistically competitive industry

If a firm increases its output in the ________ and unit costs ________, then the firm is experiencing ________ of scale.

-Refer to above figure. The monopolist can export as much as it likes of its steel at the world price of $5/ton. How much steel will the monopolist sell, and at what price?

If the market for products produced by firms in a monopolistically competitive industry becomes ________, then there will be ________ firms and each firm will produce ________ output and charge a ________ price.

A monopolistic firm

Two countries engaged in trade in products with no scale economies, produced under conditions of perfect competition, are likely to be engaged in

Imperfectly competitive firms have a demand curve that ________ and a marginal revenue curve that ________ and is ________ the demand curve.