Exhibit 10.3

-Exhibit 10.3 shows the demand,marginal revenue,and cost curves for a monopolistic competitor.In the long run,_____

Question

Exhibit 10.3
 
-Exhibit 10.3 shows the demand,marginal revenue,and cost curves for a monopolistic competitor.In the long run,_____

Quizplus · Accepted Answer

In the long run, new firms will enter the market due to the presence of economic profits. As new firms enter, the demand for the existing firm's product will decrease, causing the demand curve to shift leftward, resulting in a lower equilibrium price. As a result, the firm's economic profits will decrease until they are driven to zero. This is known as the entry and exit process, and it leads to a long-run equilibrium where price equals average total cost, and economic profit is zero. Therefore, option D is the correct choice. Options A, B, C, and E are not accurate because they do not adequately describe the long-run equilibrium in a monopolistic competition market.

Exhibit 10.3 -Exhibit 10.3 Shows the Demand,marginal Revenue,and Cost Curves for a Cost