Exhibit 10-1 A monopolistic competitive firm
-If all firms in the industry are the same as the monopolistic competitive firm shown in this Exhibit 10-1, firms in the long run will:

Question

Exhibit 10-1 A monopolistic competitive firm 
-If all firms in the industry are the same as the monopolistic competitive firm shown in this Exhibit 10-1, firms in the long run will:

Quizplus · Accepted Answer

In the long run, new firms will enter the industry due to the positive economic profits being earned by the firm. This will increase competition and bring the economic profits of all firms back down to zero. Firms are unlikely to leave the industry since they are earning positive profits, but they will face more competition.

Exhibit 10-1 a Monopolistic Competitive Firm