A monopolistically competitive industry is in the process of moving toward long-run equilibrium.This period the product of a typical firm has more substitutes than last period.This means that

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Quizplus · Accepted Answer

If there are more substitutes, it indicates that there was entry into the industry, as new firms offering substitutes have emerged. This increased competition means that a typical firm's profits will fall this period, as it will have to lower its price to remain competitive. Therefore, both option A and C are correct.

A Monopolistically Competitive Industry Is in the Process of Moving