If firms in a monopolistically competitive market are incurring economic losses, which of the following statements describes the changes that occur as the market adjusts to the long-run equilibrium?

Question

Quizplus · Accepted Answer

As firms incur economic losses, they will exit the market, reducing the number of firms and increasing the demand for the remaining firms. This will shift the demand curve to the right and allow each firm to eliminate its excess capacity.

If Firms in a Monopolistically Competitive Market Are Incurring Economic