Figure 10.3 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. In the long run, _____.
Figure 10.3.

Question

Figure 10.3 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. In the long run, _____.​ ​
Figure 10.3.
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Quizplus · Accepted Answer

In the long run, economic profits will attract new firms to enter the market. As a result, the market supply will increase, causing the demand curve faced by the monopolistic competitor to shift leftward. This will reduce the quantity sold and increase the average total cost due to the diminishing returns to product differentiation. Ultimately, the economic profit will be driven to zero, representing a situation of long-run equilibrium in a monopolistically competitive market. Therefore, option D is the correct choice.

Figure 103 Shows the Demand, Marginal Revenue, and Cost Curves for for a Monopolistic