Suppose that chocolate is a monopolistically competitive industry in both the United States and the EU. Suppose that in the past neither the US nor the EU have allowed chocolate imports from each other. Both now allow free trade in chocolate. The result is that the demand curve for each firm in the United States will be a) More elastic and also that of the EU. b) More elastic and, therefore, less elastic than the EU. c) Least elastic and, therefore, the most elastic that of the EU. d) Answers (B) and (C) may be correct
Suppose that chocolate is a monopolistically competitive industry in both the United States and the EU. Suppose that in the past neither the US nor the EU have allowed chocolate imports from each other. Both now allow free trade in chocolate. The result is that the demand curve for each firm in the United States will be a) More elastic and also that of the EU. b) More elastic and, therefore, less elastic than the EU. c) Least elastic and, therefore, the most elastic that of the EU. d) Answers (B) and (C) may be correct
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that chocolate is a monopolistically competitive industry in both the United States and the EU. Suppose that in the past neither the US nor the EU have allowed chocolate imports from each other. Both now allow free trade in chocolate. The result is that the demand curve for each firm in the United States will be a) More elastic and also that of the EU. b) More elastic and, therefore, less elastic than the EU. c) Least elastic and, therefore, the most elastic that of the EU. d) Answers (B) and (C) may be correct.
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