If all the firms in a monopolistically competitive market are incurring losses,then eventually:

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms have some degree of market power but face competition from other firms selling similar products. If all the firms in the market are incurring losses, it indicates that the price they can charge is lower than their average total cost of production. In such a scenario, some firms will exit the market in the long run until the remaining ones are just breaking even. This is because if some firms exit, the demand for the products sold by the remaining firms will increase, allowing them to charge higher prices and make profits.  Therefore, the best choice is E.

If All the Firms in a Monopolistically Competitive Market Are