Question

A monopolistically competitive firm is currently earning a positive economic profit. If other firms enter the market, we would expect that the added competition will cause this firm to adjust its output such that it
a.

will no longer be at its efficient scale.

b.

might move either closer to or further from its efficient scale.

c.

will operate further from its efficient scale.

d.

will operate closer to its efficient scale.

Answer 1

Answer:

C.

Will operate further from its efficient scale.