Question: Suppose the firms in a monopolistically competitive market are incurring economic losses. During the adjustment to long-run equilibrium, which of the following will occur?
- The firms' demand curves will become more elastic.
- More close substitutes will appear in the market.
- The demand curves faced by firms that remain in the market will shift to the left.
- Some firms will exit the market if they can't cover all of their fixed and variable costs