Question

Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. In this monopolistic market, economic profit would encourage ________, which decreases the ________ for each firm's meals.

a. entry; supply

b. exit; demand

c. exit; supply

d. entry; demand

Answer 1

In a monopolistic market, economic profit would encourage entry of new firms, which decreases the demand for each firm’s meals. So, the correct answer would be d. entry; demand.