Use the figure below to answer the following questions. Figure 13.2.1
-Refer to Figure 13.2.1.If this firm in monopolistic competition is in short-run equilibrium,then
A)rival firms will enter the industry.
B)all firms will exit the industry.
C)economic profit of all firms in the industry is zero.
D)it produces 60 units of output to maximize economic profit.
E)the firm's profits can be expected to rise over time.

Question

Use the figure below to answer the following questions.  Figure 13.2.1
-Refer to Figure 13.2.1.If this firm in monopolistic competition is in short-run equilibrium,then
A)rival firms will enter the industry. 
B)all firms will exit the industry. 
C)economic profit of all firms in the industry is zero. 
D)it produces 60 units of output to maximize economic profit. 
E)the firm's profits can be expected to rise over time.

Quizplus · Accepted Answer

In monopolistic competition, if a firm is making profits in the short run, it attracts rival firms to enter the industry due to the low barriers to entry and the potential for profit, leading to increased competition.

Use the Figure Below to Answer the Following Questions