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What has changed in the industry when moving from the short run to the long run? Explain why.

uestion 3: Monopolistic Competition (20 Points) Costs & Revenue The SHORT RUN МC ATC econ proft profi AR DC MR Output Copyrig
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In the short run firms are earning positive economic profit which encourages new firms to enter the market. This divides the existing demand into larger number of firms. As a result demand for each firm falls such that price charged is equal to average cost and all existing firms earn zero economic profit.

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