Table 10.2 Eco Energy is a monopolistically competitive producer of a sports beverage called Power On.Table 10.2 shows the firm's demand and cost schedules.
-Refer to Table 10.2.What is likely to happen to the product's price in the long run?
A)It will fall.
B)It will increase.
C)It will remain constant.
D)This cannot be determined without information on its long-run demand curve.

Question

Table 10.2  Eco Energy is a monopolistically competitive producer of a sports beverage called Power On.Table 10.2 shows the firm's demand and cost schedules.
-Refer to Table 10.2.What is likely to happen to the product's price in the long run?
A)It will fall. 
B)It will increase. 
C)It will remain constant. 
D)This cannot be determined without information on its long-run demand curve.

Quizplus · Accepted Answer

In the long run, new firms will enter the market to compete with Eco Energy, driving down the demand for Power On and causing its price to fall. This is the characteristic behavior of a monopolistically competitive market in the long run.

Table 102 Eco Energy Is a Monopolistically Competitive Producer of of a Sports