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Figure: The Market for Gas Stations
-General Snacks is a typical firm in a market characterized by the model of monopolistic competition.Initially,the market is in long-run equilibrium,and then there is an increase in the market demand for snacks.We expect that:

Question

Use the following to answer questions :
Figure: The Market for Gas Stations 
-General Snacks is a typical firm in a market characterized by the model of monopolistic competition.Initially,the market is in long-run equilibrium,and then there is an increase in the market demand for snacks.We expect that:

Quizplus · Accepted Answer

In monopolistic competition, firms are free to enter or exit the market. An increase in market demand for snacks will create a profit opportunity for new firms to enter the market in the long run. This will increase the number of firms in the industry, leading to a decrease in market share and profits for existing firms. Therefore, the best answer is A.

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