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Q. |
If firms in monopolistic competition are enjoying positive economic profits, in the long run |
A. | they will continue enjoying such profits, since new firms will be unable to enter the industry |
B. | consumers will cease wanting to buy such expensive goods and will switch to cheaper alternatives |
C. | this will attract new firms into the industry, causing prices to drop and profits to disappear |
D. | the government will have to step in and regulate the price |
Answer» C. this will attract new firms into the industry, causing prices to drop and profits to disappear |
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