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:

Midline

An imaginary line that divides the body into equal left and right halves.

Upward Direction

Movement or orientation towards a higher point or position.

Cell Membrane

The semipermeable membrane surrounding the cytoplasm of a cell, regulating the passage of substances in and out.

Proton

A subatomic particle found in the nucleus of an atom, carrying a positive electric charge.