If Regulators Were to Ensure That Monopolistically Competitive Firms Follow

question 107

Multiple Choice

If regulators were to ensure that monopolistically competitive firms follow a marginal cost-pricing rule:

• A) new firms would be likely to enter the market.
• B) the most efficient firms would not likely be affected.
• C) all firms would experience losses.
• D) firms would operate at the most efficient scale.

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Definitions:

Rule in Rylands v. Fletcher

A legal principle establishing liability for harm caused by the escape of something likely to do mischief from one's land.

Strict Liability

A legal principle where the defendant is liable for the consequences of an action, regardless of intent or negligence.

Strict Liability

A legal doctrine where a party is responsible for damages or loss, not due to negligence or intent, but because they are in a certain activity or role.

Dangerous Substances

Materials that can pose a risk to health, safety, or the environment due to their hazardous properties.