FIGURE 10-1 -The Profit-Maximizing Firm Illustrated in Figure 10-1 Operates in a 10-1

FIGURE 10-1

-The profit-maximizing firm illustrated in Figure 10-1 operates in a monopolistically competitive industry. Which of the following best explains what happens in the long run?

A) New firms enter the industry and the firm's marginal cost curve shifts up, which leads to a decrease in the firm's output.
B) New firms want to enter the market but cannot since there are barriers to entry in monopolistic competition.
C) The market supply curve shifts right, reducing the equilibrium market price.
D) New firms enter the industry and the firm's demand curve shifts left and becomes more elastic.