1. In the model of monopolistic competition, trade costs between countries cause:

a. all firms that can earn a profit on domestic sales to export their goods at higher prices

b.marginal costs of export goods to exceed the marginal costs of goods sold domestically

c. all firms that can earn a profit on domestic sales to export their goods at lower prices

d. countries to negotiate the elimination of trade costs by mutual subsidisation of trade

e. marginal costs of goods sold domestically to exceed the marginal costs of exported goods

2. True or false.In the model of monopolistic competition, trade costs between countries cause some firms that can earn a profit on domestic sales to refrain from exporting their goods.

Select one:

True

False

3. If an industry is imperfectly competitive, and markets are segmented then a firm may find that:

a. international trade is unprofitable

b. it should become more specialised

c. it has lost its comparative advantage

d. it should not promote scale economies

e. it is profitable to engage in dumping

4. The most common form of price discrimination in international trade is:

a. Voluntary Export Restraints

b. non-tariff barriers

c. product boycotts

d. dumping

e. preferential trade agreements