There Are Externalities Associated with Entry into a Monopolistically Competitive

question 157

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

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Definitions:

Commercial Credit

A type of financing that allows businesses to obtain goods or services with payment to be made at a later date.

Consumer Financial Protection Bureau

A federal agency in the United States responsible for consumer protection in the financial sector.

Regulatory Action

Steps or interventions taken by a government agency to enforce rules, regulations, or laws, usually to protect public interest.

Hidden Fees

Charges or costs that are not disclosed upfront or are difficult to find in the terms of an agreement or contract.