How do consumers benefit from trade among monopolistically competitive firms?
A) Prices are the same as in autarky, but the wider choice of goods increases consumer surplus.
B) Consumer surplus increases because prices are lower than in autarky, and there is a wider choice of goods.
C) Prices are higher than in autarky, but the wider choice of goods increases consumer surplus.
D) The government provides cash subsidies to consumers.

Question

Quizplus · Accepted Answer

Consumers benefit from trade among monopolistically competitive firms because prices are lower than in autarky, and there is a wider choice of goods. This leads to an increase in consumer surplus.

How Do Consumers Benefit from Trade Among Monopolistically Competitive Firms