In the model of monopolistic competition, if firms have ________ average cost curves, then opening trade will ________ the total number of firms and ________ the average price.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms have downward sloping average cost curves due to economies of scale. Opening trade increases market size, leading to a decrease in the total number of firms as less efficient firms exit, and a decrease in the average price due to increased competition and efficiency.

In the Model of Monopolistic Competition, If Firms Have ________