Carmen's Café is a monopolistic competitor. If Carmen is currently producing at the output level where her average total cost is minimized and the café is earning economic profits, then in the long run output will

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In the long run, other firms may enter the market to compete with Carmen, causing demand for her café to decrease. As a result, Carmen will have to decrease her output to reduce costs and maintain her price level. This decrease in output will lead to a higher average cost as fixed costs are spread over a smaller quantity of output.

Carmen's Café Is a Monopolistic Competitor