If economic profits are earned in a monopolistically competitive market,
A)More firms will enter the market.
B)The market supply curve will shift to the left.
C)Price will rise.
D)The market demand curve will shift to the right.

Question

Quizplus · Accepted Answer

When economic profits are earned in a monopolistically competitive market, it attracts new firms to enter the market, seeking to earn some of those profits. This entry of new firms increases competition and typically leads to a decrease in prices and profits over time.

If Economic Profits Are Earned in a Monopolistically Competitive Market