Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?
A) The firm's demand curve will shift to the right if it stays in business in the long run.
B) The firm will exit the industry if it continues to suffer economic losses.
C) The firm will break even if it stays in business in the long run.
D) In the long run, the firm will be able to charge a price that is greater than its average total cost.

Question

Quizplus · Accepted Answer

In the long run, monopolistically competitive firms will be able to adjust to the economic losses by lowering their production costs or differentiating their products. As a result, the firm will be able to charge a price that is greater than its average total cost, thereby avoiding further losses. However, options A, B, and C may or may not happen depending on various factors such as the firm's ability to differentiate its product, availability of substitutes, and entry of new firms into the industry.

Which of the Following Will Not Happen as a Consequence