Question

If some firms leave a monopolistically competitive industry, what will happen to the remaining firms?

1) They will experience an increase in demand
2) They will experience a decrease in demand
3) They will experience no change in demand
4) They will experience a decrease in competition

Answer 1

In a monopolistically competitive industry, if some firms leave, the remaining firms will experience a decrease in demand.

Step-by-step explanation:

In a monopolistically competitive industry, if some firms leave, the remaining firms will experience a decrease in demand. When firms leave the industry, the competition decreases and the remaining firms have less competition for their products, which leads to a decrease in demand.