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Internal Scale Economies

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Why do you think that if an industry were operating under conditions of domestic internal scale economies (applies to firm in the country), then the resultant equilibrium cannot be consistent with the pure competition model?

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The solution goes into a great amount of detail about the economies of scale. The concepts are very well explained and easy to understand. The solution can be followed very easily by anyone who has some understanding of the concepts beforehand. Overall, an excellent response to the question.

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If an industry were operating under conditions of domestic internal scale economies, then it would be in the company's best interest to produce more as it will have a lower marginal cost of production if it produces more goods. It will disregard the market equilibrium and produce ...

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