Assume that there is only one firm producing electric toothbrushes and its firm specific demand curve is the same as the market demand curve.If a second firm that also produces electric toothbrushes enters the market,profit of the first firm decreases because:

Question

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The entry of a second firm increases competition, leading to a decrease in price (A) and a reduction in the quantity produced by the first firm (B), both of which contribute to a decrease in profit.

Assume That There Is Only One Firm Producing Electric Toothbrushes