Other Things Equal, If More Firms Enter a Monopolistically Competitive

question 69

Multiple Choice

Other things equal, if more firms enter a monopolistically competitive industry,

• A) the demand curves facing existing firms would shift to the right.
• B) the demand curves facing existing firms would shift to the left.
• C) the demand curves facing existing firms would become less elastic.
• D) losses would necessarily occur.

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Definitions:

Manufacturer

A person or company that makes goods for sale, typically involving machinery and labor.

Unit Contribution Margin

The amount by which the sale price of a unit exceeds its variable cost, indicating how much each unit contributes to covering fixed costs and generating profit.

Organic Fertilizer

A type of fertilizer made from natural organic materials, such as compost, manure, or bone meal, which enriches soil fertility without the use of synthetic chemicals.

Manufacturer

A person or company that makes goods for sale through the process of combining raw materials and components.