In the long run, a monopolistically competitive firm that trades
Internationally ____________ than it would in autarky.
A)will produce more output
B)will earn more monopoly profits
C)will have higher average costs
D)will produce more output and earn more monopoly profits

Question

Quizplus · Accepted Answer

When a monopolistically competitive firm trades internationally, it gains access to a larger market, which allows for increased production and sales. This increase in output would lead to a reduction in the firm's per-unit average costs. However, the firm may not necessarily earn more monopoly profits since it would face increased competition from foreign firms.

In the Long Run, a Monopolistically Competitive Firm That Trades