FIGURE 10-1 -The Profit-Maximizing Firm Illustrated in Figure 10-1 Operates in a 10-1

question 17

Multiple Choice

FIGURE 10-1

-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?

• A) New firms enter the industry and the firm's marginal cost curve shifts up, which leads to a decrease in the firm's output.
• B) New firms want to enter the market but cannot since there are barriers to entry in monopolistic competition.
• C) The market supply curve shifts right, reducing the equilibrium market price.
• D) New firms enter the industry and the firm's demand curve shifts left and becomes more elastic.