In a monopolistically competitive market like restaurants, large capital-intensive firms like mcdonald's may co-exist with more labor-intensive mom-and-pop shops. in this case, higher labor costs would tend to favor the survival of

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22 January, 17:07

In a monopolistically competitive market like restaurants, large capital-intensive firms like mcdonald's may co-exist with more labor-intensive mom-and-pop shops. in this case, higher labor costs would tend to favor the survival of

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Nikhil Olsen · Answer 1

Large firms. The larger firms would have a great deal more capital, and could survive changes in their workers wages. However, mom-and-pop shops would likely have such a small profit margin, therefore higher labor costs would put them out of business.