In the model of monopolistic competition, trade costs between countries will cause domestic and foreign markets to have ________ prices, ________ quantities sold, and ________ profit levels.

Question

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In a model of monopolistic competition, trade costs (such as tariffs, shipping costs, etc.) make it more expensive to sell products in foreign markets, leading to different prices due to the need to cover these additional costs. These trade costs also affect the quantities sold, as higher prices in foreign markets can reduce demand. Finally, profit levels will differ because firms face different costs and demand conditions in each market, affecting their profitability.

In the Model of Monopolistic Competition, Trade Costs Between Countries