The Pizza Delivery Industry Is Monopolistically Competitive

The pizza delivery industry is monopolistically competitive. Little Joe's Pizzeria raises its prices by 10%, but all the other pizzerias in town keep their prices the same. Which of the following is most likely to occur?

A) Little Joe's Pizzeria will not be able to sell any pizzas, because it was the only firm to raise its price.
B) Little Joe's Pizzeria will lose some of its customers.
C) Little Joe's Pizzeria's profits will increase.
D) The number of customers served by Little Joe's Pizzeria will increase.

Correct Answer:

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