What Would Happen If Regulators Required Firms in Monopolistically Competitive

question 157

Multiple Choice

What would happen if regulators required firms in monopolistically competitive markets to set price equal to marginal cost

• A)Firms would respond by lowering their costs.
• B)Firms would require a subsidy to stay in business.
• C)New firms entering the market would operate at the efficient scale.
• D)The most efficient firms would not be affected.

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