Interindustry trade is not based on comparative advantage since it consists of the export and import of similar goods

When trade occurs among nations with similar tastes, technology, products, and costs, monopolistically competitive firms will have an incentive:

a. to lower prices to get new customers and increase market share. b. to raise prices to take advantage of a lucrative situation. c. to cut corners in manufacturing to boost profits. d. to raise quality, so they can charge a higher price than the competition.

What is the imitation problem resulting from technological advance? How might a dominant firm respond to the threat from product innovation by a smaller firm?

What will be an ideal response?