Multiple Choice
There are externalities associated with entry into a monopolistically competitive market.The product-variety externality arises because:
A) new firms offer products different to the existing firms, and consumers value choice
B) incumbent firms offer a range of differentiated products, which is valued by consumers
C) entry increases competition and lowers prices, which benefits all consumers
D) firms post a price above marginal cost and are eager to sell too many units
Correct Answer:
Verified
Correct Answer:
Verified
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