In the long run, new firms will enter a monopolistic competitive industry until

Question

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In a monopolistically competitive market, new firms will continue to enter the industry as long as existing firms are earning economic profits. Entry will occur until the profits are driven down to zero, at which point there is no longer an incentive for new firms to enter. This does not necessarily mean that firms are operating at minimum average total cost or incurring losses.

In the Long Run, New Firms Will Enter a Monopolistic