When the Gain from a Product-Variety Externality Exceeds the Loss

question 4

Multiple Choice

When the gain from a product-variety externality exceeds the loss from a business stealing externality in a monopolistically competitive market:

• A)market efficiency is likely to be enhanced by the entrance of new firms in the market
• B)the market structure is likely to be in transition
• C)firms are more likely to operate at efficient scale
• D)there are likely to be too many firms in the market

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Definitions:

Long-Term Bondholders

Individuals or entities that invest in bonds with maturities typically longer than 10 years.

Debtors

Individuals or entities that owe money to others; they are the borrowers in financial transactions.

Computer Programmer

A computer programmer is a professional skilled in writing, testing, and maintaining code that enables software and applications to function.

Psychologically

Pertaining to the study of the mind and behavior, or relating to mental processes and emotional responses.