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Monopolistic Competition and Oligopoly
Worksheet
Grade Level
Economics & Financial Literacy
12.20 Monopolistic Competition and Oligopoly
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A profitable firm in a differentiated clothing market faces entry by new brands. What is the most likely long-run effect on the incumbent's demand curve?
A
It shifts right indefinitely because entry raises monopoly power
B
It becomes perfectly inelastic because brand loyalty is permanent
C
It disappears because all firms must charge the same price
D
It shifts left and becomes more elastic as substitutes increase
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