Use Figure 17.2, which shows the demand curve, marginal revenue curve, and cost curves of Stiff Shirt, Inc., a producer of shirts in monopolistic competition, to work Problems 6 and 7.

In the long run, will new firms enter the shirt market or will firms exit from that market and will the price of a shirt rise or fall? Explain your answer.

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FIGURE 17.2 Chapter Checkpoint Study Plan Problems 6, 7 Price and cost (dollars per shirt) 100 80 60 40 20 0 50 100 MR MC D ATC 150 200 250 Quantity (shirts per week)