Which of the following statements is NOT an effect of a new competitor entering the market?

• A. The competition could launch new or improved products, prompting R&D spending
• B. The market becomes safer for monopolies
• C. Improves the market by providing more choice and keeping prices low
• D. Prices tend to be more competitive as firms compete

Answer: (B)

Introducing a new competitor drives stronger rivalry in the market. Firms respond by innovating and improving what they offer, which often leads to increased R&D spending as they try to differentiate themselves and capture demand. With more players, consumers gain additional choices, and competitive pressure tends to push prices down or keep them from rising as quickly. Prices also become more competitive because firms must compete on value and efficiency to win customers.

The statement that the market becomes safer for monopolies doesn't fit this dynamic. More competition erodes the dominant power of any single firm and reduces the ability of a monopolist to set higher prices or earn excessive profits. So the option asserting safety for monopolies isn’t an effect of a new entrant.