In the model we discussed with increasing returns and monopolistic competition (the Krugman model), gains from trade arise from: O pro-competitive effects scale effects increased variety effects selection effects All of the above O A, B, and C

All of the above (  the gains from trade are much larger in the presence of selection effect

with cost per unit of output decreasing with increasing scale and if cost is minimum than gains are arises.

work of Krugman (1979), product variety has played a central role in models of trade and growth because if varieties are more then consumer has more preference that arises the gains.

Pro-competitive effects lead firm to expand output toward a first- best when the market expands through trade, reducing the distortion between price and marginal cost.)