Exhibit 9-1 A monopolistic competitive firm

-In the long run,which of the following is true for the firm shown in Exhibit 9-1?

Question

Exhibit 9-1 A monopolistic competitive firm
 
-In the long run,which of the following is true for the firm shown in Exhibit 9-1?

Quizplus · Accepted Answer

In the long run, firms in monopolistic competition will earn zero economic profit, meaning price will equal average total cost. This can cause the demand curve to shift leftward if there is a decrease in consumer demand for the product. Additionally, if there is an increase in input costs or other factors that increase average total cost, then the ATC curve will shift upward. Therefore, both options a and b are possible outcomes for the firm in the long run.

Exhibit 9-1 a Monopolistic Competitive Firm