If Firms Are Able to Freely Enter and Exit a Monopolistically

question 102

Multiple Choice

If firms are able to freely enter and exit a monopolistically competitive industry,then we can predict

• A)a negatively sloped demand curve for the industry.
• B)strategic behaviour with regard to other firms in the industry.
• C)brand proliferation.
• D)zero profits in long-run equilibrium.
• E)that exit will occur until no firm has excess capacity.

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Definitions:

Moral Hazard

A situation in economic transactions where one party is willing to take risks because the negative consequences of the risk will be borne by another party.

Health Care Insured

Refers to individuals or entities that are covered under a health insurance plan, providing financial protection against medical expenses.

Diet And Exercise

A combined approach of nutritional intake and physical activity designed to improve or maintain health and fitness.

Moral Hazard

A scenario where one party takes risks or does not have the motivation to mitigate risk because another party is responsible for the fallout.