If monopolistically competitive firms are incurring losses,existing firms would

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Monopolistically competitive firms, like any profit-maximizing firms, will not continue to operate at a loss. Therefore, firms that are incurring losses in the short run will exit the industry in the long run. This will reduce the number of firms in the industry, which will reduce competitive pressure and could ultimately lead to higher prices and profits for the remaining firms.

If Monopolistically Competitive Firms Are Incurring Losses,existing Firms Would