Suppose that monopolistically competitive firms in a certain market are experiencing losses. In the transition from this initial situation to a long-run equilibrium,
A)the number of firms in the market decreases.
B)each existing firm experiences a decrease in demand for its product.
C)each firm experiences an upward shift of its marginal cost and average total cost curves.
D)each existing firm's average total cost falls to bring economic profit back to zero.

Question

Quizplus · Accepted Answer

In the long run, firms experiencing losses will exit the market, reducing the number of firms until the remaining firms break even, achieving zero economic profit.

Suppose That Monopolistically Competitive Firms in a Certain Market Are