Which of the following is NOT a short-run opportunity that international trade provides for a monopolistically competitive firm?
A) International trade provides an opportunity for it to produce more output.
B) International trade provides an opportunity to for it to earn monopoly profits.
C) International trade provides an opportunity for it to reduce its average costs.
D) International trade provides an opportunity for it to reduce its fixed costs.

Question

Quizplus · Accepted Answer

International trade does not provide an opportunity for a monopolistically competitive firm to reduce its fixed costs in the short run. Fixed costs are long-term expenses that cannot be adjusted in the short run. International trade may provide opportunities for a firm to produce more output, earn monopoly profits, or reduce its average costs (by taking advantage of economies of scale or accessing cheaper inputs).

Which of the Following Is NOT a Short-Run Opportunity That