Multiple Choice
A monopolistically competitive market can have too many firms enter, that is, the number of firms in a market can be greater than the socially optimal number.For there to be too much entry, which of the following needs to occur?
A) the product-variety externality is greater than the business-stealing externality
B) the business-stealing externality is greater than the product-variety externality
C) price needs to be below average total cost, leading to negative profits
D) some consumers must value the product at less than the price they paid
Correct Answer:
Verified
Correct Answer:
Verified
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