Multiple Choice QuestionCompared with oligopoly and monopoly, entry of new firms into monopolistically competitive industries isMultiple choice question.relatively difficult because average costs are high.relatively easy because firms need to develop differentiated products.relatively difficult because capital requirements are high.relatively easy because firms do not need to advertise.relatively easy because economies of scale are few.
Question
Multiple Choice QuestionCompared with oligopoly and monopoly, entry of new firms into monopolistically competitive industries isMultiple choice question.relatively difficult because average costs are high.relatively easy because firms need to develop differentiated products.relatively difficult because capital requirements are high.relatively easy because firms do not need to advertise.relatively easy because economies of scale are few.
Solution
The correct answer is: relatively easy because economies of scale are few.
In monopolistically competitive industries, there are few economies of scale, which means that large firms do not have a cost advantage over small ones. This makes it easier for new firms to enter the market. Additionally, while firms in these industries do differentiate their products, this does not necessarily make entry difficult. It simply means that new firms must also differentiate their products in some way.
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