Suppose firms in a monopolistically competitive industry are currently earning short-run economic profits.In the long run,the demand curve facing each individual firm is likely to _____

Question

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In a monopolistically competitive market, when firms are earning short-run economic profits, new firms are attracted to the industry. This increases competition for the existing firms, leading to a leftward shift in the demand curve for each firm as consumers have more options. Additionally, the demand curve becomes flatter, indicating more elastic demand because consumers have more substitutes to choose from.

Suppose Firms in a Monopolistically Competitive Industry Are Currently Earning