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Q. Is it possible that if positive scale economies characterize an industry, that its equilibrium can be consistent with purely competitive conditions? Explain how this would happen.
Answer: Yes if the degree economies were external to the firm afterwards there is no reason why the firms may not be in perfect competition.
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Q. Explain why, according to Feldstein and Horioka, one should expect that domestic investment rates diverge widely from saving rates. Answer: The decisions of corporations t
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What constitutes the basis for trade? What are the gains from trade in terms of production and consumption? Use theories and examples from a country of your choice.
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