What is the expected outcome when trade occurs in a monopolistically competitive industry if the nations have similar tastes, technology, products, and costs?
A) No trade is possible.
B) Consumers are left with no choices.
C) Each firm has a larger market in which to sell, and consumers have more choices of sellers and products.
D) Transportation costs become the driving factor.

Question

Quizplus · Accepted Answer

In a monopolistically competitive industry with similar tastes, technology, products, and costs, trade can occur and each firm can have a larger market in which to sell. This means that consumers have more choices of sellers and products, leading to a greater variety of goods available.

What Is the Expected Outcome When Trade Occurs in a Monopolistically