When New Firms Have an Incentive to Enter a Competitive

question 209

Multiple Choice

When new firms have an incentive to enter a competitive market, their entry will

• A)increase the price of the product.
• B)drive down profits of existing firms in the market.
• C)shift the market supply curve to the left.
• D)increase demand for the product.

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Definitions:

Rationalizing Decision

The process of providing logical or rational reasons to justify a decision, often after the decision has been made.

Analyzing Options

The process of evaluating different choices or paths before making a decision.

Select Few

A small and exclusive group of people chosen or regarded as being superior or having special privileges, skills, or qualities.

Panic Button Effect

A reduction in stress or suffering due to a belief that one has the option of escaping or controlling the situation, even if one doesn’t exercise it.