When new firms enter a monopolistically competitive industry,the market
A)Supply curve shifts to the left.
B)Supply curve shifts to the right.
C)Demand curve shifts to the left.
D)Demand curve shifts to the right.

Question

Quizplus · Accepted Answer

When new firms enter a monopolistically competitive industry, the supply curve shifts to the right because there are more firms producing goods and services, thus increasing the overall supply. This results in a decrease in the market price levels, making it more price competitive. Therefore, as the supply curve shifts to the right, the quantity demanded also shifts to a higher level.

When New Firms Enter a Monopolistically Competitive Industry,the Market