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If Firms in a Monopolistically Competitive Industry Are Incurring Losses

Question 146

Multiple Choice

If firms in a monopolistically competitive industry are incurring losses, in the long run


A) investment in this industry will increase to reduce production costs.
B) firms will leave this industry until the remaining firms are earning a normal profit.
C) firms will leave this industry until the firms that remain are earning a positive economic profit.
D) the government will subsidize the losses incurred by these firms so as to maintain competition in the industry.

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