The running shoe market is a monopolistically competitive market. Firms in the running shoes market are making an economic profit. Do you expect firms to enter the running shoes market or exit from that market in the long run? ... When a firm in a monopolistically competitive market is making an economic profit, OA. we don't expect firms to enter the market in the long run because of barriers to entry OB. we expect firms to enter the market in the long run OC. we expect firms to enter the market in the long run only if new firms will have excess capacity OD. we expect firms to enter in the long run only if they have zero markup OE. we don't expect firms to enter the market because increased competition will eliminate excess capacity Next Canv suppo d? =

The running shoe market is a monopolistically competitive market. Firms in the running shoes market are making an economic profit. Do you expect firms to enter the running shoes market or exit from that market in the long run? ... When a firm in a monopolistically competitive market is making an economic profit, OA. we don't expect firms to enter the market in the long run because of barriers to entry OB. we expect firms to enter the market in the long run OC. we expect firms to enter the market in the long run only if new firms will have excess capacity OD. we expect firms to enter in the long run only if they have zero markup OE. we don't expect firms to enter the market because increased competition will eliminate excess capacity Next Canv suppo d? =

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 5PA

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Similar questions

If the firms in a monopolistically competitive market are earning economic profits or losses in the short run, would you expect them to continue doing so in the long run? Why?
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?
Suppose that, due to a successful advertising campaign, a monopolistic competitor experiences an increase in demand for its product. How will that affect the price it charges and the quantity it supplies?
Aside from advertising, how can monopolistically competitive films increase demand for their products?
What is the relationship between product differentiation and monopolistic competition?
Make a case for why monopolistically competitive industries never reach long-run equilibrium.
Intellectual property laws are intended to promote innovation, but some economists, such as Milton Friedman, have argued that such laws are not desirable. In the United States, there is no intellectual property protection for food recipes or for fashion designs. Considering the state of these two industries, and hearing in mind the discussion of the inefficiency of monopolies, can you think of any reasons why intellectual property laws might hinder innovation in some cases?