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

question 11

Multiple Choice

When the loss from a business-stealing externality exceeds the gain from a product-variety externality,what do we expect will happen

• 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:

Discharged by Agreement

The termination of contractual obligations through mutual consent of the parties involved.

Contract

A legally binding agreement between two or more parties that outlines obligations and rights of each party.

Anticipatory Breach

Occurs when one party to a contract indicates, before the performance is due, that they will not fulfill their contractual obligations.

Misrepresentation

An untrue statement of fact; an incorrect or false representation.