How does free trade relate to the theory of oligopoly?
Free trade increases the number of producers of a product, which keeps prices closer to marginal cost. The more producers there are in a market, the more difficult it will be for firms to collude. Because collusion moves the market price and quantity away from socially optimal levels, free trade enhances social welfare.
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Countries that are more open to international trade tend to have
A) property rights that are not well defined. B) higher levels of economic growth. C) lower levels of physical capital. D) lower levels of economic growth.
Suppose there is a rise in the real wage rate. As a result, the quantity of labor demanded
A) increases. B) decreases. C) does not change because there is no change in the money wage rate. D) increases only if the price level also decreases.