The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2

-If new firms enter a monopolistically competitive industry, the demand facing a typical firm increases.

Question

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms).Table 12.2
 
-If new firms enter a monopolistically competitive industry, the demand facing a typical firm increases.

Quizplus · Accepted Answer

If new firms enter a monopolistically competitive industry, the demand facing a typical firm decreases because the market becomes more crowded and there are more substitutes available for the consumers to choose from.

The Table Below Shows the Payoff (Profit) Matrix of Firm