What Is the Result When New Firms Are Encouraged to Enter

question 251

Multiple Choice

What is the result when new firms are encouraged to enter a monopolistically competitive market?

• A)Some existing firms must be earning economic profits.
• B)They do so because there is insufficient product differentiation.
• C)The demand curve facing an existing firm shifts to the right.
• D)The marginal cost curve facing an existing firm shifts downwards.

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Definitions:

Intangible Asset

An asset that lacks physical substance and is not financial in nature, such as patents, trademarks, and goodwill.

Preferred Stockholders

Investors who own shares of preferred stock in a company, typically entitled to dividends before common stockholders and having priority in assets upon liquidation.

Board Of Directors

A group of individuals elected by shareholders to oversee and make strategic decisions for a corporation.

Treasury Stock

Shares that were issued and later reacquired by the issuing company, reducing the amount of outstanding stock on the open market.