A monopolistically competitive industry is characterised by: O Firms supplying homogeneous goods or services in the market O Firms facing a downward sloping demand curve for their goods or services O Firms maximising their profits by setting their prices equal to their marginal c O Firms earning positive economic profits in the long run O Barriers to entry that prevent new firms from entering this market O None of the other answers are correct

A monopolistically competitive industry is characterised by: O Firms supplying homogeneous goods or services in the market O Firms facing a downward sloping demand curve for their goods or services O Firms maximising their profits by setting their prices equal to their marginal c O Firms earning positive economic profits in the long run O Barriers to entry that prevent new firms from entering this market O None of the other answers are correct

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 5QCMC

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Continuing with the scenario in question 1, in the long run, the positive economic profits that the monopolistic competitor earns will attract a response either from existing firms in the industry or film outside. As those films capture the original films profit, what will happen to the original films profit-maximizing price and output levels?
Make a case for why monopolistically competitive industries never reach long-run equilibrium.
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