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QUESTION A.2 The reason why the most efficient firms in a Melitz industry make greater profits under free trade is due to the fact that

QUESTION A.2 The reason why the most efficient firms in a Melitz industry make greater profits under free trade is due to the fact that they A. Operate under increasing marginal costs. B. Operate under FDI. C. Operate under low transport costs. D. Operate under increasing returns to scale. (1 mark) Explain your answer in up to 200 words and using a diagram (4 marks)

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