When firms enter a monopolistically competitive market and the business-stealing externality is larger than the product-variety externality then ?

A. The only way to improve efficiency in this market is for the government to regulate it like a natural monopoly.

B. There are too few firms in the market and market efficiency could be be increased with additional entry

C. the number of firms in the market is optimal and the market is efficient

D. there are too many firms in the market and market efficiency could be increased if firms exited the market

Found an error? Read our corrections policy and report it in the comments below.

Be the first to comment if anything wrong with this mcq
Your comment successfully submitted!
It will automatically posted after review and approval by our staff member.