Which is NOT an assumption of the model of trade under monopolistic competition?
ID: 1198925 • Letter: W
Question
Which is NOT an assumption of the model of trade under monopolistic competition?
Long- and short-run equilibria are identical whether or not the country is open to trade.
Many firms produce goods using an increasing-returns-to-scale technology.
Long-run economic profits are zero.
Products are similar but differentiated.
A.Long- and short-run equilibria are identical whether or not the country is open to trade.
B.Many firms produce goods using an increasing-returns-to-scale technology.
C.Long-run economic profits are zero.
D.Products are similar but differentiated.
Explanation / Answer
Which is NOT an assumption of the model of trade under monopolistic competition?
Ans: A. Long- and short-run equilibria are identical whether or not the country is open to trade.
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