2. Decrease in the per unit cost with an increase in the number of units produced is known as

a) specialization

b) production advantage

c) economies of scale

d) economies of scope

3. If an industry earns a return on capital in excess of its cost of capital:

a) Incumbents will earn abnormal profit, and build entry barriers

b) The government will intervene to make sure that competition increases

c) It will attract firms outside the industry, but the incumbents will have erected entry barriers

d) It is likely to attract the attention of firms looking to enter the industry, which may eventually lead to the return on capital falling

4. In the game-theoretic framework seen in the Airbus-Boeing case, what was the Nash equilibrium concerning whether to build the VLCT?

a) Airbus and Boeing both build the VLCT

b) Airbus builds the VLCT, and Boeing does not

c) Boeing builds the VLCT, and Airbus does not

d) Neither Boeing nor Airbus build the VLCT

5. When suppliers are large and few their bargaining power is

a) high

b) low

c) nonexistent

d) irrelevant