Question:

If firms in monopolistic competition are enjoying positive economic profits, in the longrun

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