In the model of monopolistic competition and increasing returns, in the trade equilibrium, the output of each firm will Group of answer choices not determined remain unchanged increase decrease

In the model of monopolistic competition and increasing returns, in the trade equilibrium, the output of each firm will increase.

Here's why:

1. Monopolistic competition is a market structure where many firms sell products that are similar but not identical. Each firm has a monopoly on its own product, but competes with other firms in the market.

2. Increasing returns, also known as economies of scale, occur when a firm's output increases more than proportionately to an increase in its inputs. This means that as a firm grows larger, it can produce more output with the same amount of inputs.

3. In a trade equilibrium, the quantity of a good that a country exports equals the quantity it imports. This means that the market for that good is balanced.

4. When a firm in a monopolistically competitive market faces increasing returns, it can produce more output at a lower cost. This gives it an incentive to increase its output.

5. As a result, in the trade equilibrium, the output of each firm will increase. This is because each firm can produce more output at a lower cost, and because the market for the good is balanced, each firm can sell all of its output.

In the model of monopolistic competition and increasing returns, in the trade equilibrium, the output of each firm will increase.

Here's why:

1. Monopolistic competition is a market structure where many firms sell products that are similar but not identical. Each firm has a monopoly on its own product, but competes with other firms in the market.

2. Increasing returns, also known as economies of scale, occur when a firm's output increases more than proportionately to an increase in its inputs. This means that as a firm grows larger, it can produce more output