In Monopolistic Competition If There Is Profit, There Is

question 16

Multiple Choice

In monopolistic competition if there is profit, there is:

• A) a signal for new firms to enter.
• B) a motive for existing firms to increase prices.
• C) proof that advertising works.
• D) a motive for existing firms to decrease prices.

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Definitions:

Agency Relationship

A legal relationship in which one party, the agent, acts on behalf of another party, the principal, in conducting transactions with third parties.

Actual Authority

The express power granted by a principal to an agent to perform tasks or make decisions on their behalf.

Principal

The initial amount of a loan or investment, excluding any interest or dividends.

Agent

An individual or entity authorized to act on behalf of another.