Author Question: As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will (Read 61 times)

HCHenry · **on:** Apr 19, 2019

Question 1

If firms in a monopolistically competitive industry are incurring losses, in the long run

◦ investment in this industry will increase to reduce production costs.
◦ firms will leave this industry until the remaining firms are earning a normal profit.
◦ firms will leave this industry until the firms that remain are earning a positive economic profit.
◦ the government will subsidize the losses incurred by these firms so as to maintain competition in the industry.

Question 2

As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will

◦ shift to the left and become more elastic because there are now more substitutes for its product.
◦ shift to the left and become less elastic because there are now more substitutes for its product.
◦ not be affected because the new firms do not produce a perfect substitute for its product.
◦ shift to the left, but the elasticity of demand will not be affected.

eliasc0401 · **Reply #1 on:** Apr 19, 2019

A FREE account is required to view all solutions!

Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

Answer Preview

Only 25% of students answer this correctly