Suppose that firms in a monopolistically competitive industry are earning short-run economic profits.In the long run, the demand curve facing each individual firm can be expected to

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In the long run, new firms will enter the industry in response to the economic profits being earned. This will increase the number of firms in the industry and shift the demand curve facing each individual firm to the left, as there will be more competition for customers. The curve will also become flatter, as firms will have to lower their prices to remain competitive. This will eventually lead to zero economic profits in the long run.

Suppose That Firms in a Monopolistically Competitive Industry Are Earning