Assume that the bagel bakery industry is monopolistically competitive in London.

Question

Assume that the bagel bakery industry is monopolistically competitive in London. Panaderia 8 , a bagel bakery raises its prices by 7%, but all the other bagel bakeries in London keep their prices unchanged. Which of the following is most likely to occur? A) The number of customers served by Panaderia 8 will increase. B) Panaderia 8 will lose some of its customers. C) Panaderia 8 will not be able to sell any bagels since it was the only bakery to raise its price. D) Panaderia 8's profits will increase.

Explanation / Answer

B) Panaderia 8 will lose some of its customers

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