If a Profit-Maximizing Monopolistic Competitor Earns Positive Economic Profits in the Short

question 98

Multiple Choice

If a profit-maximizing monopolistic competitor earns positive economic profits in the short run:

• A) demand will become increasingly inelastic as new firms enter.
• B) the firm should increase its output as new firms enter.
• C) there must be barriers to entry into the industry.
• D) new firms will be attracted to the industry.
• E) both b. and d. are correct.