When the Loss from a Business-Stealing Externality Exceeds the Gain

question 246

Multiple Choice

When the loss from a business-stealing externality exceeds the gain from a product-variety externality,

• A)firms are more likely to operate at efficient scale.
• B)there are likely to be too many firms in a monopolistically competitive market.
• C)market efficiency is likely to be enhanced by the entry of new firms.
• D)the market structure is likely to be in transition.

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Definitions:

Common Law

A legal system based on custom, court rulings, and precedents rather than codified laws.

Permanently Replaced Strikers

Workers who go on strike and are then permanently replaced by the employer, a situation possible under certain labor laws, notably in the United States.

Hot Cargo Agreements

Agreements between labor unions and employers that prohibit the employer from handling, using, or dealing with goods produced by a company targeted by a union boycott.

Monopolies

Market structures in which a single seller dominates trade in a good or service, often leading to reduced competition and higher prices.