Refer to Figure 26.4 for a monopolistically competitive firm. If the firm currently faces Demand2 and MR2, then it will earn

A. A negative economic profit, and firms will exit the industry.
B. A positive economic profit, and firms will enter the industry.
C. A positive economic profit, and firms will exit the industry.
D. Zero economic profit, and neither entry nor exit will occur.


Answer: D

Economics

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