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 curve, marginal$-$revenue $($MR$)$ curve, marginal$-$cost $($MC$)$ curve, and average$-$total$-$cost $($ATC$)$ curve.

Place the black point $($plus symbol$)$ on the graph to indicate the short$-$run profit$-$maximizing price and quantity for this monol company. Then, use the green rectangle $($triangle symbols$)$ to shade the area representing the company's profit or loss.

$(?)$

longrightarrow$$

Monopolistically Competitive Outcome

Profit or Loss

Given the profit$-$maximizing choice of output and price, the company is making $$ profit, which means there are

$$ companies in the industry relative to the long$-$run equilibrium.

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

QUANTITY $($BIKeS$)$

Which of the following statements are true about both monopolistic competition and monopolies? Check all that apply.

Price is above marginal cost.

Firms can earn positive profit in the long run.

Firms are not price takers.

Price equals average total cost in the long run.