The Product-Variety Externality Arises in Monopolistically Competitive Markets Because

question 244

Multiple Choice

The product-variety externality arises in monopolistically competitive markets because

• A)firms produce with excess capacity.
• B)firms try to differentiate their products.
• C)firms would like to produce homogeneous products, but the large number of firms prohibits it.
• D)entry and exit is restricted.

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Definitions:

Triad

In social sciences, a group or relationship that involves three entities, which can significantly differ in dynamics from dyads (two entities).

Two-Component Model

A theory or framework that divides a concept or phenomenon into two distinct parts for better understanding or analysis.

Attitude

A psychological tendency expressed by evaluating an entity with some degree of favor or disfavor.

Three-Component Model

A theory in psychology that describes three major components of attitude: cognitive, affective, and behavioral.