International Economics Chapter 6 Quiz 1. The following graph shows a monopolistically competitive market in its long-run equilibrium without trade. a. Illustrate the short-run effects of opening up...

International Economics Chapter 6 Quiz
1. The following graph shows a monopolistically competitive market in its long-run
equilibrium without trade.
a. Illustrate the short-run effects of opening up to trade (5 points)
When the trade opens up for the monopolistically competitive firm, the demand will increase due
to larger size of the market. The demand D/NA shifts to the right due to increase in demand,
dragging along the curve d1 and mr1. Short run equilibrium occurs at the point D where each
firms...