A monopolistically competitive market is like both a competitive market and a monopoly in that all three market structures feature easy entry by new firms in the long run. firms in all three market structures maximize profit by producing an output level where marginal revenue equals marginal cost. firms in all three market structures produce the welfare-maximizing level of output. O All of the above are correct.

A monopolistically competitive market is like both a competitive market and a monopoly in that all three market structures feature easy entry by new firms in the long run. firms in all three market structures maximize profit by producing an output level where marginal revenue equals marginal cost. firms in all three market structures produce the welfare-maximizing level of output. O All of the above 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?
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