In the long run, new firms will enter a monopolistic competitive industry until
A)minimum average total cost is achieved.
B)all firms are incurring losses.
C)economic profits in the industry are zero.
D)a and b

Question

Quizplus · Accepted Answer

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