If Firms Are Able to Freely Enter and Exit a Monopolistically

question 63

Multiple Choice

If firms are able to freely enter and exit a monopolistically competitive industry, then we can predict

• A) strategic behaviour with regard to other firms in the industry.
• B) zero profits in long- run equilibrium.
• C) brand proliferation.
• D) that exit will occur until no firm has excess capacity.
• E) a negatively sloped demand curve for the industry.

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