Exhibit 10-1 A monopolistic competitive firm
-In the long run, the demand curve for the monopolistic competitive firm shown in Exhibit 10-1:
A) shifts leftward.
B) remains the same.
C) shifts rightward.
D) none of these.

Question

Exhibit 10-1 A monopolistic competitive firm 
-In the long run, the demand curve for the monopolistic competitive firm shown in Exhibit 10-1:
A) shifts leftward. 
B) remains the same. 
C) shifts rightward. 
D) none of these.

Quizplus · Accepted Answer

In the long run, new firms enter the market due to the presence of economic profits, causing the demand curve for existing firms to shift leftward as market share is divided among more competitors.

Exhibit 10-1 a Monopolistic Competitive Firm