If there is an economic profit in monopolistic competition, there is
A) an incentive for new firms to enter
B) an incentive for existing firms to increase prices
C) at least one firm engaged in advertising
D) an incentive for existing firms to decrease prices
E) the absence of product differentiation

Question

Quizplus · Accepted Answer

In monopolistic competition, economic profit attracts new firms to enter the market, increasing competition and eventually driving profits down.

If There Is an Economic Profit in Monopolistic Competition, There