If the Edmonton doughnut market is monopolistically competitive and the firms are earning short-run profits,consumers in Edmonton will see less diversity in the doughnuts offered over time.

Question

Quizplus · Accepted Answer

In monopolistically competitive markets, firms differentiate their products to stand out from their competitors, resulting in a diverse range of products. Therefore, if firms are earning short-run profits, they may invest more in product differentiation and offer even more diverse doughnuts over time to attract more customers.

If the Edmonton Doughnut Market Is Monopolistically Competitive and the Firms