Company Alpha produces its product in a perfectly competitive market that is in long-run equilibrium. What will happen if it lowers its price while increasing its output? It will increase revenue but increase costs by the same amount. It will incur economic losses. It will take business from its competitors, increasing its revenue and profit. It will begin to develop market power, making its market imperfectly competitive. Its producer surplus will increase but consumer surplus will decrease by a greater amount.
Company Alpha produces its product in a perfectly competitive market that is in long-run equilibrium. What will happen if it lowers its price while increasing its output? It will increase revenue but increase costs by the same amount. It will incur economic losses. It will take business from its competitors, increasing its revenue and profit. It will begin to develop market power, making its market imperfectly competitive. Its producer surplus will increase but consumer surplus will decrease by a greater amount.
Chapter26: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 5E
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30.
Company Alpha produces its product in aperfectly competitive market that is in long-run equilibrium. What will happen if it lowers its price while increasing its output?
Company Alpha produces its product in a
It will increase revenue but increase costs by the same amount.
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It will incur economic losses.
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It will take business from its competitors, increasing its revenue and profit.
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It will begin to develop market power, making its market imperfectly competitive.
|
Its
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31.
If barriers to entry ________ or product differentiation ________, competition in a market will ________.
If barriers to entry ________ or product differentiation ________, competition in a market will ________.
increase; increases; increase
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increase; decreases; increase
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decrease; increases; increase
|
decrease; decreases; increase
|
decrease; decreases; decrease
|
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