In a Monopolistically Competitive Market, a Successful New Restaurant

question 1

Multiple Choice

In a monopolistically competitive market, a successful new restaurant

• A)can earn economic profits in the long run if it uses barriers to restrict entry by new restaurants.
• B)will earn zero economic profit in the long run because of free entry, but competition will lead restaurants to offer different versions of the same product.
• C)will face high entry barriers because of health and safety regulations to which all restaurants are subject.
• D)must obtain a trademark to ensure that it will break even in the long run.

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Definitions:

Adjudicated Insane

A legal determination made by a court that an individual lacks the mental capacity to manage their own affairs or to understand the nature of a criminal act.

Voidable

A term describing a legal contract or action that may be nullified or terminated at the discretion of one or both parties involved.

Covenant Not to Compete

An agreement where one party agrees not to enter into or start a similar profession or trade in competition against another party.

Ongoing Business

A company or commercial enterprise that continues to operate and engage in its activities, as opposed to one that is in the process of closing down or has ceased operations.