When deregulation makes it easier for new firms to enter a market,
A) an oligopoly changes into monopolistic competition.
B) oligopolistic competitive structures change to monopolies.
C) pure competition competitive structures change to monopolistic competition.
D) a monopoly changes to an oligopoly.

Question

Quizplus · Accepted Answer

Deregulation reduces barriers to entry, allowing more firms to enter the market. This increase in the number of firms transforms an oligopoly, where a few firms dominate, into monopolistic competition, characterized by many firms competing with differentiated products.

When Deregulation Makes It Easier for New Firms to Enter