The Diagram Below Shows Demand and Cost Curves for a Monopolistically

Multiple Choice

The diagram below shows demand and cost curves for a monopolistically competitive firm. FIGURE 11-3
-Refer to Figure 11-3.If an increase in industry demand led to an outward shift in each firm's demand curve,and no change to the firm's costs,the typical firm would

A) be making profits and new firms would enter the industry in the long run.
B) be making losses and some firms would exit the industry in the long run.
C) would expand its output in the long run.
D) increase costs in order to break even at P₁ and Q₁ in the long run.
E) decrease costs in order to break even at P₁ and Q₁ in the long run.