Final answer:
In a monopolistic competitive market structure, new firms will enter the market if current firms are profitable, leading to increased competition, reduced demand and marginal revenue for individual firms, and an eventual zero economic profit in the long run.
Step-by-step explanation:
If a firm operates in a monopolistic competitive market structure, in the long run, the likely scenario is that firms will enter the market if there are positive economic profits. This entry will increase competition, decrease individual firms' demand (D) and marginal revenue (MR), and eventually lead to firms earning zero economic profits. Hence, the correct answer is A. firms will enter the market, D and MR will decrease, and profit = zero.
The key to understanding this outcome lies in the fact that in monopolistic competition, there are low barriers to entry, which allows new firms to enter the market easily if they perceive that existing firms are making profits. Once these new firms enter the market, the increased competition will decrease the demand facing each individual firm, thus reducing their marginal revenue and lowering the market price until it equalizes with the average cost. At this point, firms will earn zero economic profit; which is a normal profit or the minimum level of profit necessary for them to stay in business. Economic profit differs from accounting profit in that it accounts for opportunity costs.