ATC ved In the above figure, what would happen to the monopolistically competiti

Question

ATC ved In the above figure, what would happen to the monopolistically competitive industry in the long run? More producers would enter the market, and the share of the market to this firm 1) would fall, which would cause the demand curve to shift leftward until there is zero economic profit More producers would enter the market, and the share of the market to this firm 2) would rise, which would cause the demand curve to shift rightward until there is zero economic profit. More producers would exit the market, and the share of the market to this firm would profit. More producers would enter the market, and the share of the market to this firm 3) fall, which would cause the demand curve to shift leftward until there is zero economic Saved 4) would fall, which would cause the demand curve to shift leftward until there is FR F9 F10 F11

Explanation / Answer

In the Long Run all the Firms earn Zero economic profit. Here, the MOnopolistic firm is Earning an economic profit since the price it is charging is more than ATC. Due to this profit more number of firms will get attracted towards this industry therefore the aagregate supply will increase/rise and at the same time the demand of the firm will decline that is shift leftwards.

The market share of the firm will get distributed therefore it would decline.Last option is correct.

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