How do consumers benefit from trade among monopolistically competitive firms?
a. Prices are the same as in autarky, but the wider choice of goods increases consumer surplus.
b. Consumer surplus increases because prices are lower than in autarky, and there is a wider choice of goods.
c. Prices are higher than in autarky, but the wider choice of goods increases consumer surplus.
d. The government provides cash subsidies to consumers
Ans: b. Consumer surplus increases because prices are lower than in autarky, and there is a wider choice of goods.
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