In the Short Run, a Monopolistically Competitive Firm Produces at the Optimal

Multiple Choice

In the short run, a monopolistically competitive firm produces at the optimal level of output and is earning positive economic profits. In the long run, the _____ of firms shifts the firm's demand and marginal revenue curves _____ the firm's level of output and _____ the price it can charge until price equals average total cost.

A) entry; leftward, decreasing; decreasing
B) entry; leftward, decreasing; increasing
C) entry; downward, decreasing; decreasing
D) exit; rightward, increasing; increasing