-Consider the typical monopolistically competitive firm whose demand curve and cost structure is illustrated in Figure 11-5.Which of the following statements is correct in the long run?
A)Some firms will exit this market,and the demand curves facing the remaining firms will shift rightward.
B)Some firms will exit this market,and the demand curves facing the remaining firms will shift leftward.
C)Firms will enter this market,and the demand curves facing the remaining firms will shift rightward.
D)Firms will enter this market,and the demand curves facing the remaining firms will shift leftward.
E)Firms will enter this market,but the demand curves facing the remaining firms will not change

Question

-Consider the typical monopolistically competitive firm whose demand curve and cost structure is illustrated in Figure 11-5.Which of the following statements is correct in the long run?
A)Some firms will exit this market,and the demand curves facing the remaining firms will shift rightward. 
B)Some firms will exit this market,and the demand curves facing the remaining firms will shift leftward. 
C)Firms will enter this market,and the demand curves facing the remaining firms will shift rightward. 
D)Firms will enter this market,and the demand curves facing the remaining firms will shift leftward. 
E)Firms will enter this market,but the demand curves facing the remaining firms will not change

Quizplus · Accepted Answer

In the long run, some firms will exit the market because they are making losses. This will reduce the supply of the product, which will shift the demand curve facing the remaining firms to the right.

-Consider the Typical Monopolistically Competitive Firm Whose Demand Curve and Cost