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If firms in a monopolistically competitive market are earning negative economic profits, it is likely that:

User Maehler
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It is likely that: B. firms will exit the market if firms in a monopolistically competitive market are earning negative economic profits.

Firms will exit the market since there is no point in staying in a monopolistically competitive market where you’d be earning negative economic profits, as this means a loss of income, as well as the loss of investment.

User Aleksey Bilogur
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