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Figure: Monopolistic Competition III
-(Figure: Monopolistic Competition III) The figure Monopolistic Competition III shows the demand, marginal revenue, marginal cost, and average total cost curves for Pat's Pizza Parlor, a monopolistic competitor in the food-to-go industry. In the long run, the demand curve for Pat's Pizza Parlor will shift to the _____ as competitors _____ the market.
A) right; enter
B) right; leave
C) left; enter
D) left; leave

Question

Use the following to answer questions:
Figure: Monopolistic Competition III 
-(Figure: Monopolistic Competition III) The figure Monopolistic Competition III shows the demand, marginal revenue, marginal cost, and average total cost curves for Pat's Pizza Parlor, a monopolistic competitor in the food-to-go industry. In the long run, the demand curve for Pat's Pizza Parlor will shift to the _____ as competitors _____ the market.
A) right; enter 
B) right; leave 
C) left; enter 
D) left; leave

Quizplus · Accepted Answer

In the long run, as new competitors enter the market, the demand curve for an existing firm like Pat's Pizza Parlor will shift to the left due to increased competition and reduced market share.

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