As new firms enter a monopolistically competitive industry, the demand curve facing a typical firm will most likely

Question

Quizplus · Accepted Answer

As new firms enter a monopolistically competitive industry, the market becomes more competitive, resulting in a larger supply of products. This, in turn, shifts the demand curve faced by a typical firm to the left, reducing the demand for its products. Hence, the best choice is E, which is "shift to the left."

As New Firms Enter a Monopolistically Competitive Industry, the Demand