The figure shows the revenue and cost curves for a monopolistic competitor before and after several new firms enter the industry.

Dold

shows the demand curve before the entry of new firms, and

Dnew

shows the demand curve after the entry of new firms.

Which of the following is true?

Part 2

A.

The firm was earning zero economic profits before the entry of new firms.

B.

The firm is earning positive economic profits after the entry of new firms.

C.

The firm was incurring losses before the entry of new firms.

D.

The firm is earning zero economic profits after the entry of new firms.

...

Question content area right

Part 1