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When the Loss from a Business-Stealing Externality Exceeds the Gain

Question 105

Multiple Choice

When the loss from a business-stealing externality exceeds the gain from a product-variety externality,


A) firms are more likely to operate at efficient scale.
B) there are likely to be too many firms in a monopolistically competitive market.
C) market efficiency is likely to be enhanced by the entry of new firms.
D) all firms are earning negative economic profit.

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