If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will

Question

Quizplus · Accepted Answer

When new firms enter a monopolistically competitive industry, they increase the number of products available. This diversification reduces the demand for existing firms' products as consumers now have more options to choose from, leading to a decrease in the product demand facing existing firms.

If Monopolistically Competitive Firms in an Industry Are Making an Economic