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Figure: Profit Maximization in Monopolistic Competition
-(Figure: Profit Maximization in Monopolistic Competition) Look at the figure Profit Maximization in Monopolistic Competition. If other firms see economic profits in the industry, they will enter it, and the demand curve for firms already in the industry will shift to the _____; in the long run, this will result in an economic profit _____ and a price _____.
A) right; equal to zero; equal to ATC
B) right; greater than zero; greater than ATC
C) left; less than zero; less than ATC
D) left; equal to zero; equal to ATC

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Use the following to answer questions:
Figure: Profit Maximization in Monopolistic Competition 
-(Figure: Profit Maximization in Monopolistic Competition) Look at the figure Profit Maximization in Monopolistic Competition. If other firms see economic profits in the industry, they will enter it, and the demand curve for firms already in the industry will shift to the _____; in the long run, this will result in an economic profit _____ and a price _____.
A) right; equal to zero; equal to ATC 
B) right; greater than zero; greater than ATC 
C) left; less than zero; less than ATC 
D) left; equal to zero; equal to ATC

Quizplus · Accepted Answer

In monopolistic competition, new firms entering the market due to economic profits will cause the demand curve for existing firms to shift left. In the long run, this results in zero economic profit and a price equal to average total cost (ATC).

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