If monopolistically competitive firms are earning economic profits,then in the transition to the long-run equilibrium:

Question

Quizplus · Accepted Answer

In the transition to long-run equilibrium, more firms will enter the industry as there are economic profits to be made. This increased competition will lead to a decrease in prices. With more firms and lower prices, each firm will have to produce a smaller quantity of output to maintain its market share and profits. Therefore, all of the above options will occur.

If Monopolistically Competitive Firms Are Earning Economic Profits,then in the Transition