Which of the Following Offers the Best Reason Why Restaurants

question 26

Multiple Choice

Which of the following offers the best reason why restaurants are not considered to be perfectly competitive firms?

• A)Restaurants do not sell identical products.
• B)Restaurants compete in small market areas-neighborhoods and cities-rather than in regional or national markets. Therefore, restaurants are not small relative to their market size.
• C)Restaurants usually have entry barriers in the form of zoning restrictions and health regulations.
• D)Restaurants have significant liability costs that perfectly competitive firms do not have; for example, customers may sue if they suffer from food poisoning.

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