We can represent the entry of new firms into a monopolistically competitive market by shifting the existing firms':
A) demand curves downward.
B) demand curves upward.
C) demand curves more inelastic.
D) cost curves upward.
E) cost curves downward.

Question

Quizplus · Accepted Answer

The entry of new firms increases competition in the market, reducing the market power of existing firms. This results in a decrease in the demand for the products of existing firms, which causes their demand curves to shift downward.

We Can Represent the Entry of New Firms into a Monopolistically