Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm.
-Refer to Table 16-4. Which of the following is likely to happen in the long run in this market?
A)The market is currently in a long-run equilibrium.
B)The market price is likely to rise.
C)Firms are likely to enter the market since firms are earning a positive economic profit.
D)Firms are likely to leave the market since firms are earning a negative economic profit.

Question

Table 16-4
This table shows the demand schedule, marginal cost, and average total cost for a monopolistically competitive firm. 
-Refer to Table 16-4. Which of the following is likely to happen in the long run in this market?
A)The market is currently in a long-run equilibrium. 
B)The market price is likely to rise. 
C)Firms are likely to enter the market since firms are earning a positive economic profit. 
D)Firms are likely to leave the market since firms are earning a negative economic profit.

Quizplus · Accepted Answer

Since firms are earning a positive economic profit, it is likely that new firms will enter the market in the long run, which will increase competition and decrease economic profit.

Table 16-4 This Table Shows the Demand Schedule, Marginal Cost, and Average