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

Question

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After the entry of new firms, the monopolistic competitor faces increased competition, which will drive down its market power and its ability to charge high prices. Thus, the monopolistic competitor will have to set a lower equilibrium price in the long run to maintain its market share and generate profits. This lower price will also be lower than the equilibrium price charged by the firm before the entry of new firms. However, it may still be higher than the equilibrium price charged by a perfectly competitive firm in the long run.

The Equilibrium Price Charged by a Monopolistic Competitor in the Long