If firms in a monopolistically competitive market are incurring economic losses, which of the following statements describes the changes that occur as the market adjusts to the long-run equilibrium?

Question

Quizplus · Accepted Answer

In the long run, firms in a monopolistically competitive market will adjust to the point where they are making zero economic profit. This means that each firm's demand curve will shift to the left, and some firms will exit the market. The remaining firms will eliminate their excess capacity and produce at the point where marginal cost equals marginal revenue.

If Firms in a Monopolistically Competitive Market Are Incurring Economic