Freedom of Entry and Exit in Monopolistic Competition

question 22

Multiple Choice

Freedom of entry and exit in monopolistic competition

• A) means that firms' price and average total cost of producing are always equal.
• B) never allows firms to earn economic profits.
• C) leads to falling prices when new firms enter the market.
• D) forces firms to abandon product differentiation but only in the long run.

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Definitions:

Impression

A metric used in digital marketing to represent the number of times an advertisement or social media post is displayed, regardless of whether it was clicked or not.

Norm

A standard or pattern of social behavior that is typical or expected within a particular group or culture.

Homophily

The tendency of individuals to associate and bond with others who are similar to themselves in characteristics such as beliefs, values, and socioeconomic status.