The figure given below shows the revenue and cost curves of a monopolistically competitive firm. Figure 25.4
MR: Marginal revenue curve
ATC: Average total cost curve
MC: Marginal cost curve
Assume that the firm in Figure 25.4 is monopolistically competitive.In the long run, we would expect:
A) the price of the firm's output to increase.
B) entry of new firms because economic profits are positive.
C) exit of few existing firms because economic profits are negative.
D) the firm's demand curve to shift outward.
E) the firm's demand curve to becomes less elastic.
Correct Answer:
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