If firms in a monopolistically competitive industry are making an economic profit,

Question

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In a monopolistically competitive market, if firms are making economic profits, new firms are attracted to the industry (A), which increases competition and typically leads to a decrease in economic profits over time (B). Additionally, in such markets, firms often have some power to set prices above marginal cost (C), which contributes to their ability to earn economic profits initially.

If Firms in a Monopolistically Competitive Industry Are Making an Economic