In the Model of Monopolistic Competition, Trade Costs Between Countries

question 19

Multiple Choice

In the model of monopolistic competition, trade costs between countries cause

• A) marginal costs of goods sold domestically to exceed the marginal costs of exported goods.
• B) countries to negotiate the elimination of trade costs by mutual subsidization of trade.
• C) prices of goods sold domestically to exceed the prices of exported goods.
• D) some firms that can earn a profit on domestic sales to refrain from exporting their goods.
• E) all firms that can earn a profit on domestic sales to export their goods at higher prices.

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