In the long run, a monopolistically competitive firm that is incurring a loss will ________ if total revenue is less than variable costs.

Question

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In the long run, if a monopolistically competitive firm is incurring a loss and its total revenue is less than its variable costs, it will shut down. This is because continuing operations would lead to greater losses, as the firm would not be able to cover its variable costs, let alone its fixed costs.

In the Long Run, a Monopolistically Competitive Firm That Is