FIGURE 10-1MCATCAVCMRQuantityThe 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'soutput.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.ONew firms enter the industry and the firm's demand curve shifts left and becomes more elastic.Price

A monopolistically competitive firm produces at the intersection point of MR and MC in the short…

Answered: MC ATC G. AVC D MR Quantity he…

MC ATC G. AVC D MR Quantity he profit-maximizing firm illustrated in Figure 10-1 operates in a monopolistically competiti ne following best explains what happens in the long run? Price

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

FIGURE 10-1
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.
ONew firms enter the industry and the firm's demand curve shifts left and becomes more elastic.
Price

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