If monopolistically competitive firms are earning positive economic profits in the short run,then in the long run:

A) firms will leave the industry.
B) the demand curves faced by existing firms will move to the right.
C) economic profits will increase.
D) economic profits will be reduced to zero.

Positive Economic Profits

Earnings that exceed the total costs, including both explicit and implicit costs, signalling strong market performance.

Monopolistically Competitive

Monopolistically competitive refers to a market structure where many firms sell similar but not identical products, with each firm having some degree of market power.

Short Run

A time period in which at least one factor of production is fixed, focusing on immediate effects.