L7&8: Monopolistic Competition & Trade

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Test your understanding of monopolistic competition and related trade concepts.

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Emma

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L7&8: Monopolistic Competition & Trade


Froggy Jumps L7&8: Monopolistic Competition & TradeVersión en línea Test your understanding of monopolistic competition and related trade concepts. por Emma 1 In monopolistic competition, what best explains why profits fall in the long run? a Demand becomes perfectly elastic b Total industry sales shrink c More firms enter the market and price falls 2 What determines an individual firm’s demand in this model? a Q = P/MC b Q = S/n − b(P − P¯) c Q = S × n 3 Which costs rise for a firm as the number of firms increases? a Average cost (AC) b Fixed cost (F) c Marginal cost (MC) 4 What condition equates to zero profits in equilibrium? a MC = MR b P = MR c P = AC 5 Under monopolistic competition, what happens to price as more firms enter? a Price tends to fall b Price remains constant c Price tends to rise 6 What is a key feature of product differentiation? a Firms are price takers b All products identical c Firms are price setters for their product variety 7 Which concept explains intra-industry trade in this framework? a No trade costs b Homogeneous goods and constant returns c Differentiated goods and economies of scale 8 What is external economies of scale? a Cost per unit depends on industry size, not firm size b Costs rise with more firms in industry c Cost per unit depends on firm size only 9 What form of FDI involves replicating production abroad? a Vertical FDI b Horizontal FDI c Brownfield FDI 10 What form of FDI uses production chain fragmentation across countries? a Greenfield FDI b Vertical FDI c Horizontal FDI 11 What does the importer/exporter productivity finding support? a Exporters are smaller and less productive b Non-exporters dominate markets c Exporters are bigger and more productive 12 What is the effect of trade on consumer welfare in this model? a Less choice and higher prices b Only price effects with no variety c Greater variety and lower prices 13 What is the MR curve relative to the demand curve in monopoly? a MR lies below the demand curve b MR coincides with demand c MR lies above the demand curve 14 Which cost falls as a firm increases output (internal economies)? a Fixed cost (F) b Total cost (TC) c Average cost (AC) 15 What triggers resource reallocation in Melitz-type models? a Domestic market stagnation b Trade liberalization favoring efficient firms c Uniform firm shutdowns 16 In the model, what happens to inefficient firms with trade? a They remain unchanged b They grow rapidly c They shrink and may close down 17 What is IIT in trade terms? a Implied trade b Inter-industry trade c Intra-industry trade 18 Which factor helps explain why firms export more over time? a Higher productivity of exporters b Domestic firms always dominate c Exporting reduces productivity 19 What does the 'proximity-concentration trade-off' relate to? a Currency exchange rates b FDI decisions and location choice c Tariff levels only 20 What is the key difference between horizontal and vertical FDI? a Vertical replicates, horizontal fragments production b Horizontal replicates, vertical fragments production c Both are identical in scope 21 What is the main cause of welfare gains from FDI and outsourcing? a Reduced competition b Increased tariffs c Relocation to cost-effective locations 22 Which statement best describes monopolistic competition’s long-run outcome? a Profits are zero due to entry, not price equals marginal cost b Prices set by government c Profits rise endlessly 23 What denotes a firm's price-setting power in this framework? a Market share only b Homogenous products c Product differentiation

L7&8: Monopolistic Competition & Trade

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L7&8: Monopolistic Competition & TradeVersión en línea

por Emma

In monopolistic competition, what best explains why profits fall in the long run?

What determines an individual firm’s demand in this model?

Which costs rise for a firm as the number of firms increases?

What condition equates to zero profits in equilibrium?

Under monopolistic competition, what happens to price as more firms enter?

What is a key feature of product differentiation?

Which concept explains intra-industry trade in this framework?

What is external economies of scale?

What form of FDI involves replicating production abroad?

What form of FDI uses production chain fragmentation across countries?

What does the importer/exporter productivity finding support?

What is the effect of trade on consumer welfare in this model?

What is the MR curve relative to the demand curve in monopoly?

Which cost falls as a firm increases output (internal economies)?

What triggers resource reallocation in Melitz-type models?

In the model, what happens to inefficient firms with trade?

What is IIT in trade terms?

Which factor helps explain why firms export more over time?

What does the 'proximity-concentration trade-off' relate to?

What is the key difference between horizontal and vertical FDI?

What is the main cause of welfare gains from FDI and outsourcing?

Which statement best describes monopolistic competition’s long-run outcome?

What denotes a firm's price-setting power in this framework?