Where there are internal economies of scale, the scale of production possible in a country is constrained by
A) the size of the country.
B) the size of the domestic market.
C) the size of the trading partner's country.
D) the size of the foreign market.
E) the size of the domestic plus the foreign market.

Question

Quizplus · Accepted Answer

Internal economies of scale mean that as a firm produces more, its average costs decrease. Therefore, the scale of production is constrained by the total market size available, which includes both domestic and foreign markets.

Where There Are Internal Economies of Scale, the Scale of Production