(Figure: Monopolistic Competition) Refer to the figure.Suppose the figure represents a firm that operates in amonopolistic competitive market. In this market in the longrun you would expect:

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In the long run, firms in a monopolistic competitive market will enter or exit the industry depending on their profitability. As firms enter, demand for existing firms' products will decrease, causing them to lower their prices to maintain market share. This process will continue until price equals the firm's average cost (P = AC). Therefore, in the long run, we would expect demand to decrease and price to fall to the point where P = AC.

(Figure: Monopolistic Competition) Refer to the Figure