What happens in a monopolistically competitive market with the entry of new firms?
What will be an ideal response?
In a monopolistically competitive market, firms can earn economic profits in the short run. However, this can lead to the entry of new firms in the market. As new firms enter, the demand curve becomes flatter and shifts inward.
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Related to the Economics in Practice on page 155: Which of the following is the best analysis of the question of how fast delivery truck drivers should drive in order to reduce costs?
A. They should drive as quickly as possible in order to make more deliveries per day. B. They should balance the concerns of speed and fuel efficiency and drive at a speed that minimizes total expenses. C. They should drive at the most fuel-efficient rate in order to reduce fuel consumption costs. D. They should drive as close to the legal speed limit as possible.
The long-run aggregate supply curve is influenced by:
A) resources available. B) efficiency levels. C) level of technology. D) all of the above.