A Product Is Produced in a Monopolistically Competitive Industry with Scale

question 15

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

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Definitions:

Special Discounted Price

A reduced pricing offer made available to customers, often as a promotional or loyalty incentive.

Milling Machines

A type of machine tool used in the machining process, capable of performing cutting operations by moving a rotating cutter into the workpiece.

Profitable Use

The deployment of resources in a way that maximizes financial gain or return on investment.

Constrained Resource

A limited resource within a production process that restricts the company’s ability to meet demand.