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Chapter 6: Economies of Scale, Imperfect Competition, and International Trade External economies of scale arise when the cost per unit rises as the industry grows larger. falls as the industry grows larger rises as the average firm grows larger. falls as the average firm grows larger. remains constant. None of the above. Answer: B Internal economies of scale arise when the cost per unit rises as the industry grows larger. falls as the industry grows larger. rises as the average firm grows larger. falls as the average firm grows larger. None of the above. Answer: D External economies