The Entry of New Firms into a Monopolistically Competitive Industry

question 161

Multiple Choice

The entry of new firms into a monopolistically competitive industry causes the

• A) market demand curve to shift right.
• B) market demand curve to shift left.
• C) existing firms' demand curve to shift right.
• D) existing firms' demand curve to shift left.
• E) market supply curve to shift left.

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Definitions:

Optimal Choice

The most efficient allocation of resources or decision making that maximizes benefit or utility for an individual or entity.

Twizzlers

A brand of fruit-flavored candy in the form of twisted ropes, known for its chewy texture.

Normal Good

A good whose demand increases when consumer income rises and decreases when consumer income falls, ceteris paribus.

Consumer

A person or collective that buys products or services for their own consumption and not for making or selling them.