Exhibit 9-1 A monopolistic competitive firm

If all firms in the industry are the same as the monopolistic competitive firm shown in this Exhibit 9-1, firms in the long run will:

Question

Exhibit 9-1 A monopolistic competitive firm

If all firms in the industry are the same as the monopolistic competitive firm shown in this Exhibit 9-1, firms in the long run will:

Quizplus · Accepted Answer

In the long run, firms in monopolistic competition will experience competition from new firms that enter the industry. This is because the profits earned by the existing firms will attract new firms to enter. As a result, the demand for each firm's product will decrease and the profits of each firm will decrease as well. Therefore, firms will continue to enter the industry until economic profits are zero.

Exhibit 9-1 a Monopolistic Competitive Firm