The equilibrium output produced by a monopolistic competitor in the long run after the entry of new firms is ________.

Question

Quizplus · Accepted Answer

In the long run, the entry of new firms into the market leads to an increase in competition which results in a decrease in the monopolistic competitor's market power. As a result, the monopolistic competitor will produce less output to avoid excess capacity and reduce costs. This means the equilibrium output produced by the monopolistic competitor in the long run after entry will be lower than the equilibrium output produced before the entry of new firms.

The Equilibrium Output Produced by a Monopolistic Competitor in the Long