In monopolistic competition, when firms make an economic profit
A) the existing firms continue to make an economic profit in the long run because of product differentiation.
B) new firms enter the industry so that the price falls and the economic profit eventually falls to zero.
C) new firms enter the industry so that output decreases and the economic profit increases.
D) new firms enter the industry so that output increases and the economic profit increases.
B
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An economic model suggests that an additional year of education increases a student's future wages by 15 percent. Using this model, answer the following questions:
a) Gary completes 8 years of education, and John completes 9 years of education. If Gary earns $20 per hour, how much is John expected to earn? b) John completes 9 years of education, and Kevin completes 12 years of education. Given John's earnings [as calculated in a)], how much is Kevin expected to earn? c) Is there any limitation to such a model? Explain your answer.
An increase in demand occurs when
A) we measure price in money price rather than real price. B) we move up the demand curve. C) the demand curve shifts to the right. D) the demand curve shifts to the left.