If monopolistically competitive firms in an industry are making an economic profit,then:
A) new firms will enter the industry and product demand will increase for the existing firms.
B) firms will exit the industry and product demand will decrease for the firms that remain.
C) firms will exit the industry and product demand will increase for the firms that remain.
D) new firms will enter the industry and product demand will decrease for the existing firms.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, economic profits attract new firms to enter the industry, increasing competition and causing the demand for existing firms' products to decrease as consumers have more choices.

If Monopolistically Competitive Firms in an Industry Are Making an Economic