Entry of new firms in monopolistically competitive industries can convey a positive externality on consumers because new products result in more consumer surplus. This externality is called the

When the theory of mercantilism was superseded by the theory of "classical liberalism" of Adam Smith around the time of the American Revolution,

(a) the colonies had shifted toward laissez faire, governmental noninvolvement in the private economy, but the new nation rejected the philosophy of laissez faire. (b) governmental involvement in the private economy persisted in both the colonies and the new nation; the U.S. Constitution adopted the common law from England which sanctioned certain types of governmental involvement. (c) governmental involvement had already been largely abandoned in the colonies and laissez faire was officially adopted by the new nation. (d) government involvement was strong down to the time of the Revolution; it was then abandoned and laissez faire was enshrined in the Constitution and became part of the law of the land.

Holding the nonprice determinants of supply constant, a change in price would

a. result in either a decrease in supply or an increase in supply. b. result in a movement along a stationary supply curve. c. result in a shift of demand. d. have no effect on the quantity supplied.