Figure 16-7 The Lines in the Figures Below Illustrate the Potential Effect

question 391

Multiple Choice

Figure 16-7
The lines in the figures below illustrate the potential effect of entry and exit in a monopolistically competitive market on either the demand curve or the marginal cost curve of existing firms.

-Refer to Figure 16-7.Panel (d) illustrates the change that would occur if existing firms faced

• A) long-run economic losses.
• B) a decrease in the diversity of products offered in the market.
• C) new entrants in the market.
• D) firms exiting the market.

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Definitions:

Convey

To communicate or make known thoughts, feelings, or information to others.

Affect

Affect refers to the observable expression of emotions, which can influence one's thoughts and behavior.

Counterproductive

Actions or behaviours that have the opposite effect of what is intended or desired, often hindering achievement.

Clarification

The act of making a statement or situation less confused and more comprehensible.