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The Business-Stealing Externality Associated with Monopolistic Competition Arises Because in Monopolistically

Question 105

Multiple Choice

The business-stealing externality associated with monopolistic competition arises because in monopolistically competitive markets:


A) profit-maximising firms charge a price higher than marginal cost
B) profit-maximising firms produce differentiated products
C) there are few barriers to entry
D) profit-maximising firms produce at a less-than-efficient scale

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