Suppose you operate in a monopolistically competitive market. If you sell your good at a price of $10 and your average cost of production is $8

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In a monopolistically competitive market, firms have some degree of market power due to product differentiation. If a firm is earning profits in the short run, it will attract new entrants to the market in the long run. As new firms enter the market, the demand for each individual firm's product decreases, leading to lower prices and lower profits. Therefore, we can expect firms to enter the market and sell a similar good in the long run, as long as there are no significant barriers to entry.

Suppose You Operate in a Monopolistically Competitive Market