FIGURE 10-2 -The Profit-Maximizing Firm Illustrated Figure 10-2 Operates in a Monopolistically

FIGURE 10-2

-The profit-maximizing firm illustrated Figure 10-2 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 demand curve shifts left and becomes more elastic.
B) Existing firms exit the industry, and the demand curves for the remaining firms shift right, increasing prices.
C) Some firms exit the industry and the firm's marginal cost curve shifts up, which leads to a decrease in the firm's output.
D) The market supply curve shifts left, increasing the equilibrium market price.