Other things equal, if more firms enter a monopolistically competitive industry:

a. the demand curves facing existing firms would shift to the left.

b. the demand curves facing existing firms would become less elastic.

c. the demand curves facing existing firms would shift to the right.

d. losses would necessarily occur.

Question

Business

Tough Guy

26 November, 20:57

Other things equal, if more firms enter a monopolistically competitive industry:

a. the demand curves facing existing firms would shift to the left.

b. the demand curves facing existing firms would become less elastic.

c. the demand curves facing existing firms would shift to the right.

d. losses would necessarily occur.

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Answers (1)

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Jessica Allison · Answer 1

Other things equal, if more firms enter a monopolistically competitive industry the demand curves facing existing firms would shift to the left. The correct option among all the options that are given in the question is the first option or option "a". The situation is bound to become more price elastic and thsi has already happened and so it is a proved condition.