When a New Firm Enters a Monopolistically Competitive Market, the Individual

question 182

Multiple Choice

When a new firm enters a monopolistically competitive market, the individual demand curves faced by all existing firms in that market will:

• A)shift in an unpredictable direction
• B)shift to the right
• C)shift to the left
• D)remain unchanged; only the supply curve will shift

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Definitions:

Business Saving

Business Saving involves the retention of profits by a business after paying taxes and dividends, meant for future investment or to cover future expenses.

Productivity Growth

An increase in the efficiency of production, measured by the amount of goods and services produced per unit of labor, capital, or other inputs.

1970s and 1980s

A historical period characterized by major economic and political changes worldwide, including inflation and the end of the Cold War.

Productivity Growth

An increase in the efficiency of production within an economy, often measured by the output per unit of input over time.