Question : 3. What the assumptions of the Monopolistic Competition Model? Even : 2547
3. What are the assumptions of the Monopolistic Competition Model? Even if there exist same number of consumers, same technology and cost curves and the same number of firms in the no-trade equilibrium both at HOME and FOREIGN, what happens when trade opens between Home and Foreign countries, in the SHORT-RUN and in the LONG-RUN? What are the gains due to international trade? Explain. Explain also with the aid of relevant demand curves, their elasticity and cost curves.