Graph 17-3 Lines in These Figures Reflect the Potential

question 22

Multiple Choice

Graph 17-3 Lines in these figures reflect the potential effect of entry and exit in a monopolistically competitive market on the demand and/or marginal cost curves of incumbent firms.
-Refer to Graph 17-3.Panel c in the set of graphs shown depicts the effect on incumbent firms of:

• A)a few existing firms exiting the market
• B)new entrants in the market
• C)long-run economic losses
• D)an increase in the diversity of products offered in the market

---

Definitions:

Excise Tax

A tax levied on specific goods, such as alcohol and tobacco, usually to discourage consumption or generate revenue.

Buyers

Entities or groups that buy products or services for private consumption, for selling them again, or for creating other goods.

Tax Burden

The measure of taxation imposed on individuals, businesses, or goods, often expressed as a percentage of income or sales price.