If firms monopolistically competitive firms are making an economic profit, as new firms enter the market, each of the existing firms' demand curve shifts ________, the marginal curve shifts ________, and the profit-maximizing quantity ________.

Question

Quizplus · Accepted Answer

In monopolistic competition, new firms entering the market increase competition, causing existing firms' demand curves to shift leftward due to reduced market share. Consequently, the marginal curve also shifts leftward, leading to a decrease in the profit-maximizing quantity.

If Firms Monopolistically Competitive Firms Are Making an Economic Profit