Figure: Monopolistic Competition (Figure: Monopolistic Competition) Refer to the figure.Suppose the figure represents a firm that operates in amonopolistically competitive market. In the long run youwould expect:

Question

Figure: Monopolistic Competition  (Figure: Monopolistic Competition) Refer to the figure.Suppose the figure represents a firm that operates in amonopolistically competitive market. In the long run youwould expect:

Quizplus · Accepted Answer

In the long run, firms in monopolistically competitive markets will earn normal profits. If this firm is earning profits in the short run, more firms will be attracted to enter the market in the long run, increasing competition and driving down prices. Therefore, we would expect more firms to enter the market in the long run.

Figure: Monopolistic Competition (Figure: Monopolistic Competition) Refer to the Figure.Suppose