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Figure: Monopolistic Competition V
-(Figure: Monopolistic Competition V) The figure Monopolistic Competition V illustrates a firm in the _____; in the _____, the demand and marginal revenue curves will shift to the _____.
A) short run; long run; right
B) long run; short run; left
C) short run; long run; left
D) long run; short run; right

Question

Use the following to answer questions:
Figure: Monopolistic Competition V 
-(Figure: Monopolistic Competition V) The figure Monopolistic Competition V illustrates a firm in the _____; in the _____, the demand and marginal revenue curves will shift to the _____.
A) short run; long run; right 
B) long run; short run; left 
C) short run; long run; left 
D) long run; short run; right

Quizplus · Accepted Answer

In the short run, a monopolistically competitive firm can earn profits, but in the long run, new firms enter the market, increasing competition. This causes the demand and marginal revenue curves to shift to the left as the firm's market share and pricing power decrease.

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