3. How short-run profit or losses induce entry or exit Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique's demand curve, marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). Place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. Then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. 300 450 400 Monopolistically Competitive Outcome 350 300 Proft or Loss PRICE (Dolars per bike) 250 ATC 200 150 100 50 MC MR Demand 0 0 50 100 400 150 200 250 300 350 QUANTITY (Bikes) 450 500 Given the profit maximizing choice of output and price, the shop is making shops in the industry relative to the long-run equilibrium profit, which means there are Now consider the long run in which bike manufacturers are free to enter and exit the market Show the possible effect of this free entry and exit by shifting the demand curve for a typical individual producer of bikes on the following graph. Demand PRICE (Dailars per bike) Demand QUANTITY (Bikes) which of the following statements are true about both monopolistic competition and monopolies? Check all that apply. Firms can earn positive profit in the long run. Price equals average total cost in the long run. Firms are not price takers. Firms earn zero profit in the long run