If the Firms in a Monopolistically Competitive Industry Are Suffering

Multiple Choice

If the firms in a monopolistically competitive industry are suffering short-run losses, which of the following will occur in the long run?

A) Some firms will enter the industry.
B) Customers of firms that leave the industry will switch to remaining firms.
C) Firms that remain in the industry will face reduced demand.
D) Firms will continue to incur losses.
E) There will be no excess capacity.