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AP® Microeconomics

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Louie's Luau Restaurant

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Over a five-year span, Louie’s Luau Restaurant became so popular in its small town that other restaurants lost business and eventually closed.

This created an evolution of the restaurant industry in this town from monopolistic competition to oligopoly.

As a result, we would expect

A

the four-firm concentration ratio to increase.

B

the four-firm concentration ratio to decrease.

C

the four-firm concentration ratio to remain the same.

D

barriers to entry to weaken.

E

product differentiation to weaken.