Question

When entry occurs in a monopolistically competitive industry.

Group of answer choices:
O the perceived demand and marginal revenue curves for each firm will shift to the right.
O the perceived demand curve for each firm will shift to the right.
O the marginal revenue curves for each firm will shift to the right.
O the perceived demand and marginal revenue curves for each firm will shift to the left.

Answer 1

O the perceived demand and marginal revenue curves for each firm will shift to the left.

Step-by-step explanation:

Monopolistically competitive industry is an industry that has many firms that produce similar but differentiated products. The products are differentiated through branding.

As more firms enter the industry, both the perceived demand and marginal revenue curves for each firm industry will shift to the left. This is because, new firms have made available more substitutes to existing products making the demand for existing products to reduce. As the demand reduces, demand curve shift to the left, and this also makes marginal revenue to shift to the left.