Firms have incentive to enter a monopolistically competitive market if:

Question

Quizplus · Accepted Answer

Firms have incentive to enter a monopolistically competitive market if positive profits are being earned and they can create a similar product. This is because firms can enter the market, create a similar product, and earn some of the profits that are being made by existing firms. If firms were only earning zero profits, there would be little incentive to enter the market. If the price were below MC, firms would be earning negative profits and would have no incentive to enter.

Firms Have Incentive to Enter a Monopolistically Competitive Market If