For Which of the Following Reasons Is the Existence of Business-Stealing

question 141

Multiple Choice

For which of the following reasons is the existence of business-stealing externalities and product-variety externalities unique to profit-maximising firms in a monopolistically competitive market?
(i) there are few firms in the market, but each firm produces several different varieties of the product
(ii) there are many firms in the market, each with a different variety of the product
(iii) profit-maximising price exceeds marginal cost

• A)(i) and (iii) only
• B)(ii) and (iii) only
• C)(i) only
• D)(ii) only

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