Multiple Choice
In the new Keynesian view a monopolistically competitive firm may fail to increase the price of its product as demand increases because
A) if it does so it will lose all of its customers.
B) the cost to it of changing prices may exceed the benefit of doing so.
C) prices of monopolistically competitive firms are regulated by the federal government and may only be changed with permission.
D) for a monopolistically competitive firm, price is below marginal cost.
Correct Answer:
Verified
Correct Answer:
Verified
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