A Product Is Produced in a Monopolistically Competitive Industry with Scale

question 56

Multiple Choice

A product is produced in a monopolistically competitive industry with scale economies. If this industry exists in two countries, and these two countries engage in trade with each other, then we would expect

• A) the country with a relative abundance of the factor of production in which production of the product is intensive will export this product.
• B) the countries will trade only with other nations they are not in competition with.
• C) the country in which the price of the product is lower will export the product.
• D) neither country will export this product since there is no comparative advantage.
• E) each country will export different varieties of the product to the other.

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Definitions:

Evaluation Overload

A state of being overwhelmed by the need to assess too much information or too many objects of potential interest.

Interference

The phenomenon in memory where one piece of information blocks or disrupts the retrieval or learning of another.

Decay

The process of decline or deterioration over time.

Encoding Failure

A situation where the brain fails to create a memory link for information, making it difficult to remember later on.