Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.If other firms see economic profits in the industry,they will enter it,and the demand curve for firms already in the industry will shift to the _____;in the long run,this will result in an economic profit _____ zero and a price _____ ATC.
A)right;equal to;equal to
B)right;greater than;greater than
C)left;less than;less than
D)left;equal to;equal to

Question

Use the following to answer question:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition)Use Figure: Profit Maximization in Monopolistic Competition.If other firms see economic profits in the industry,they will enter it,and the demand curve for firms already in the industry will shift to the _____;in the long run,this will result in an economic profit _____ zero and a price _____ ATC.
A)right;equal to;equal to 
B)right;greater than;greater than 
C)left;less than;less than 
D)left;equal to;equal to

Quizplus · Accepted Answer

In monopolistic competition, if other firms enter the industry due to economic profits, the demand curve for existing firms shifts to the left. In the long run, this leads to economic profits being equal to zero and the price being equal to average total cost (ATC), as the market becomes more competitive and profits are normalized.

Use the Following to Answer Question