If firms in a monopolistically competitive industry are making profits in the short run
A)barriers to entry will be erected to keep out rivals.
B)some firms will ultimately exit the industry.
C)they will resort to advertising wars to help sustain these profits.
D)new firms will enter the market.

Question

Quizplus · Accepted Answer

In a monopolistically competitive industry, short-run profits attract new firms to enter the market, increasing competition and driving profits down in the long run.

If Firms in a Monopolistically Competitive Industry Are Making Profits