Q1

Melitz explains that under free trade

A.No firms will compete in the imported good market.

B.The most efficient firms will compete in the imported good market.

C.The least efficient firms will collude in the imported good market.

D.The most efficient firms will create an efficient-oligopoly paradigm, but only in the imported good market .

(1 mark)

Explain your answer in words and using a diagram

(4marks)

Q2

A country imposing a tariff can benefit in terms of social welfare if

A.If it is large.?

B.If it is small.

C.If it is unskilled-labour intensive.

D.If it is skilled-labour intensive.

(1 mark)

Explain your answer in words and using a diagram

(4marks)