Suppose a Monopolistically Competitive Industry Evolved into a Perfectly Competitive

question 124

Multiple Choice

Suppose a monopolistically competitive industry evolved into a perfectly competitive industry.Which of the following statements is correct?

• A) The industry would produce more output and charge a lower price after the change.
• B) The industry would produce at decreasing returns to scale.
• C) Elasticity of demand for the firm's product would remain the same after this change occurred.
• D) This industry would produce the same level of output at lower prices in the long run than before the change.

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Definitions:

Cognitive Dissonance

The mental discomfort experienced when holding two or more contradictory beliefs, values, or ideas simultaneously.

Attitudes

Psychological tendencies expressed by evaluating particular entities with some degree of favor or disfavor.

Role-Playing

A method of learning or therapy involving acting out roles in particular situations, often used to improve skills or behaviors.

Pro-Business

Favorable or supportive of the interests of businesses and companies, often in terms of policies or attitudes.