If the Number of Firms in a Monopolistically Competitive Industry

question 220

Multiple Choice

If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes,

• A)the likelihood of realizing economic profits in the long run would be enhanced.
• B)individual firms would now be operating at outputs where their average total costs would be higher.
• C)the industry would more closely approximate pure competition.
• D)the likelihood of collusive pricing would increase.

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Definitions:

International Strategy

A business approach used by companies to expand their operations and market presence across national borders.

National Strategy

A comprehensive plan of action developed by a country to guide decisions and achieve rational outcomes.

Payoff Matrix

A table that shows the potential outcomes or payoffs in a decision-making situation, typically used in game theory to analyze the strategies of different players.

Dominant Strategy

In game theory, a strategy that yields the best outcome for a player, regardless of what the other players do.