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As new monopolistically competitive firms enter the market, the demand facing each firm __________, causing the price charged by each firm to __________ . In the long run, each firm will earn a __________ profit.

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Answer: The correct answers are "falls", "fall" and "normal".

Explanation: As new monopolistically competitive firms enter the market, the demand facing each firm falls, causing the price charged by each firm to fall. In the long run, each firm will earn a normal profit.

In the short term, monopolistic competition resembles monopoly, since companies have some market power, but in the long term, due to the fact that there is freedom of entry and exit into the market, if companies within this market they have benefits, new companies will enter the market making them competition, so the benefits of the alleged differentiation will decrease, causing them to lose the original companies, the market power they possessed.

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