In the long run, after trade occurs, the equilibrium number of monopolistically competitive firms:
A) is less than the total number of firms worldwide in autarky.
B) is the same as the total number of firms worldwide in autarky.
C) is greater than the total number of firms worldwide in autarky.
D) may be less than, the same as, or greater than the total number of firms worldwide in autarky.

Question

Quizplus · Accepted Answer

In the long run, trade allows firms to access larger markets, leading to increased competition and efficiency. This results in a reduction in the number of firms as only the most efficient survive, making the equilibrium number of firms less than the total number worldwide in autarky.

In the Long Run, After Trade Occurs, the Equilibrium Number