Question

question 37
a monopolistically competitive industry that earns economic profits in the short run will

• experience a rise in demand in the long run.
• experience the exit of existing firms out of the industry in the long run.
• experience the entry of new rival firms into the industry in the long run.
• continue to earn economic profits in the long run.

Explanation:

In a monopolistically - competitive industry, when firms earn economic profits in the short - run, new firms are attracted by these profits. In the long - run, new rival firms will enter the industry, increasing competition and reducing the market share and profits of existing firms.

Answer:

C. experience the entry of new rival firms into the industry in the long run