If new firms enter a monopolistically competitive market structure in the long run,________.

Question

Quizplus · Accepted Answer

When new firms enter a monopolistically competitive market, the variety of products available to consumers increases, making the demand for each existing firm's product more elastic. This is because consumers now have more substitutes to choose from, making them more sensitive to changes in price. Therefore, the demand curves faced by the existing firms become more elastic.

If New Firms Enter a Monopolistically Competitive Market Structure in the Long