If regulators were to ensure that monopolistically competitive firms follow a marginal cost-pricing rule:
A) new firms would be likely to enter the market.
B) the most efficient firms would not likely be affected.
C) all firms would experience losses.
D) firms would operate at the most efficient scale.

Question

Quizplus · Accepted Answer

If monopolistically competitive firms are forced to price at marginal cost, they would not cover their average total costs, leading to losses.

If Regulators Were to Ensure That Monopolistically Competitive Firms Follow