Refer to Figure 26.4 for a monopolistically competitive firm.In the long run this firm is most likely to face

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In the long run, a monopolistically competitive firm is likely to face a demand curve that is more elastic than in the short run, meaning it will have to charge a lower price to sell the same quantity of output. This is reflected in the demand curve shifting to the right and becoming flatter, resulting in Demand₂. At the same time, in the long run, firms in monopolistically competitive markets will earn zero economic profit, meaning they produce where price equals average total cost. This occurs at the quantity where the marginal revenue curve intersects the average total cost curve, which is reflected in MR₂. Therefore, the correct choice is C.