Economies that are more open seem generally to be economies that grow faster. How might this be explained?
What will be an ideal response?
The answer should draw on Figure 12-3 which suggests possible explanations running from trade to growth, from growth to trade, and from outside factors to both.
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How does a tariff affect the domestic price of the import, the domestic consumption, the domestic production, and the quantity imported?
What will be an ideal response?
If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes:
A. the likelihood of realizing economic profits in the long run would be enhanced. B. individual firms would now be operating at outputs where their average total costs would be higher. C. the industry would more closely approximate pure competition. D. the likelihood of collusive pricing would increase.