In the long run, the positive economic profits that the monopolistic competitor earns will attract a...
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In the long run, the positive economic profits that the monopolistic competitor earns will attract a response either from existing firms in the industry or firms outside. As those firms capture the original firm's profit, what will happen to the original firm's profit-maximizing price and output levels? When there is an increase in demand the price for the goods will also increase. In the long run, the positive economic profits that the monopolistic competitor earns will attract a response either from existing firms in the industry or firms outside. As those firms capture the original firm's profit, what will happen to the original firm's profit-maximizing price and output levels? When there is an increase in demand the price for the goods will also increase.
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