Cecilia's Café is in a monopolistically competitive market.Cecilia's is currently producing where average total cost is at its minimum,and Cecilia's is earning a positive economic profit.In the long run we would expect Cecilia's output to

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In the long run, new firms will enter the market in response to the positive economic profit being earned by Cecilia's Café. This will increase competition and decrease demand for Cecilia's product, causing its output to decrease. As more firms enter the market, average total cost for all firms will increase due to the increased competition for resources. Therefore, we would expect Cecilia's average total cost to increase as well.

Cecilia's Café Is in a Monopolistically Competitive Market