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AP® Microeconomics

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Moderate

Long Run to Short Run Monopolistic Competition

APMICR-O1DE2Z

100 firms are currently operating in monopolistic competition and are earning a normal profit. Without knowing the firms are earning a normal profit, 20 new firms enter the same market. This would result in the firms

A

earning a larger profit.

B

earning a smaller profit.

C

incurring a loss.

D

continuing to earn a normal profit.

E

no change.