Firms enter the monopolistically competitive industry if:

Question

Quizplus · Accepted Answer

Firms will only enter a monopolistically competitive industry if there are profits, as this is the main incentive for firms to engage in market activities. Other factors such as scarce resources or having enough fixed inputs may be relevant for other industries, but are not specific to monopolistically competitive markets. The entry and exit of firms in a monopolistically competitive industry is driven mainly by the level of profits that can be achieved.

Firms Enter the Monopolistically Competitive Industry If