Use the figure below to answer the following questions. Figure 13.2.3 -Refer to Figure 13.2.3.Assume this firm faces demand curve D₁.If this firm in monopolistic competition is maximizing profit, A)there will be entry of rival firms into the industry. B)rival firms will exit the industry. C)the market is efficient. D)this firm will exit the industry in the long run. E)its profit will rise over time.

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In monopolistic competition, if a firm is maximizing profit, it typically means it is earning above-normal profits. This attracts entry of rival firms into the industry, seeking to capture some of those profits, leading to increased competition.

Use the Figure Below to Answer the Following Questions