Consider a monopolistically competitive market in which firms are currently earning positive profits. Which of the following best describes the expected market dynamics? Question 7Answer a. Existing firms will exit the market, causing profits to decrease b. New firms will enter the market, causing profits to decrease c. Existing firms will exit the market, causing profits to increase d. New firms will enter the market, causing profits to increase

ENGR.ECONOMIC ANALYSIS
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Consider a monopolistically competitive market in which firms are currently earning positive profits. Which of the following best describes the expected market dynamics?

Question 7Answer

a.

Existing firms will exit the market, causing profits to decrease

b.

New firms will enter the market, causing profits to decrease

c.

Existing firms will exit the market, causing profits to increase

d.

New firms will enter the market, causing profits to increase

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