Multiple Choice
In monopolistic competition, when firms make an economic profit,
A) the existing firms continue to make an economic profit in the long run because of product differentiation.
B) new firms enter the industry so that output decreases and the economic profit increases.
C) new firms enter the industry so that the price falls and the economic profit eventually falls to zero.
D) new firms enter the industry so that output increases and the economic profit increases.
Correct Answer:
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