A Monopolistically Competitive Firm in the Short and Long Run a Observations (long-run) o Profits will attract new firms to the industry (no barriers to entry o The old firm's demand will decrease to diR o Firm's output and price will fall o Industry output will rise o No economic profit (P=AC) o P>MC- some monopoly power Chapter 12 Slide 11Chapter 12 Slide 11 n Observations (long-run) l Profits will attract new firms to the industry (no barriers to entry) l The old firm’s demand will decrease to DLR l Firm’s output and price will fall l Industry output will rise l No economic profit (P = AC) l P > MC -- some monopoly power A Monopolistically Competitive Firm in the Short and Long Run