What effect does the entry of new firms have on the economic profits of existing firms? When new firms enter a monopolistically competitive market, the economic profits of existing firms A. will decrease because their demand curves will shift to the left. B. will remain unchanged because they sell differentiated products. C. will increase because their demand curves will become more elastic. D. will decrease because their demand curves will shift to the right. E. will increase because their average cost of production will decrease. Click to select your answer and then click Check Answer.
What effect does the entry of new firms have on the economic profits of existing firms? When new firms enter a monopolistically competitive market, the economic profits of existing firms A. will decrease because their demand curves will shift to the left. B. will remain unchanged because they sell differentiated products. C. will increase because their demand curves will become more elastic. D. will decrease because their demand curves will shift to the right. E. will increase because their average cost of production will decrease. Click to select your answer and then click Check Answer.
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 1.1P
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Question
What effect does the entry of new firms have on the economic profits of existing firms?
When new firms enter a monopolistically competitive market, the economic profits of existing firms
will decrease because their demand curves will shift to the left.
will remain unchanged because they sell differentiated products.
will
increase
because their demand curves will become more
elastic.
will decrease because their demand curves will shift to the right.
will increase because their average cost of production will decrease.
Click to select your answer and then click Check Answer.
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