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What Can We Expect Will Result When a Firm in a Monopolistically

Question 3

Multiple Choice

What can we expect will result when a firm in a monopolistically competitive industry increases its price by a small amount?


A) Their revenues will rise since differentiation makes demand inelastic.
B) Other firms in the industry are unlikely to react.
C) Their sales will fall dramatically since their demand curve is almost perfectly elastic.
D) Other firms in the industry will likely do the same thing.

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