FIGURE 10-1PriceMCATCAVCDMRQuantityThe profit-maximizing firm illustrated in Figure 10-1 operates in a monopolistically competitive industry. Which ofthe following best explains what happens in the long run?New firms enter the industry and the firm's marginal cost curve shifts up, which leads to a decrease in the firm'sOoutput.New firms want to enter the market but CANNOT since there are barriers to entry in monopolistic competition.The market supply curve shifts right, reducing the equilibrium market price.New firms enter the industry and the firm's demand curve shifts left and becomes more elastic.

Profit maximization is the process by which a company aims to increase its earnings to the highest…

FIGURE 10-1 Price O MC ATC AVC MR Quantity The profit-maximizing firm illustrated in Figure 10-1 operates in a monopolistically competitive industry. Which of the following best explains what happens in the long run? New firms enter the industry and the firm's marginal cost curve shifts up, which leads to a decrease in the firm's output. New firms want to enter the market but CANNOT since there are barriers to entry in monopolistic competition. The market supply curve shifts right, reducing the equilibrium market price.

FIGURE 10-1 Price O MC ATC AVC MR Quantity The profit-maximizing firm illustrated in Figure 10-1 operates in a monopolistically competitive industry. Which of the following best explains what happens in the long run? New firms enter the industry and the firm's marginal cost curve shifts up, which leads to a decrease in the firm's output. New firms want to enter the market but CANNOT since there are barriers to entry in monopolistic competition. The market supply curve shifts right, reducing the equilibrium market price.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 10P

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