If all firms in the industry are the same as the monopolistically competitive fi

Question

If all firms in the industry are the same as the monopolistically competitive firm shown, the long run will reflect: competition from new firms that enter the industry. some firms earning positive economic profit and others experiencing economic loss, all firms earning economic profit of exactly S300 per day. all firms earning positive economic profits, firms leaving the industry. A monopolistically competitive market is characterized by many small sellers selling an identical product f a smile seller of a unique product that has few or no substitutes many small sellers selling a differentiated product. very high barriers to entry. a few firms producing either differentiated or identical products

Explanation / Answer

7. a. competition from new firms that enter the industry.

If all firms in a monopolistic competitive industry have demand and cost curves like those shown in the accompanying graph, we would expect that in the long run: new firms will enter the industry.

8. Many firms selling similar but differentiated products.

There are significant barriers to entry in the market, each firm sells an identical product, Consumers lack adequate information about the prices and qualities of products, There are only a few firms in the industry.

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