how short-run profit or losses induce entry or exit citrus scooters is a company that manufactures electric scooters in a monopolistically competitive market. the following graph shows the demand curve, marginal revenue curve (mr), marginal cost curve (mc), and average total cost curve (atc) for citrus. place the black point (plus symbol) on the graph to indicate the short-run profit-maximizing price and quantity for this monopolistically competitive company. then, use the green rectangle (triangle symbols) to shade the area representing the company's profit or loss. monopolistically competitive outcome profit or loss 0 50 100 150 200 250 300 350 400 450 500 500 450 400 350 300 250 200 150 100 50 0 price (dollars per scooter) quantity (scooters) demand mr mc atc given the profit-maximizing choice of output and price, citrus scooters is earning profit, which means there are sellers in the industry relative to the long-run equilibrium amount. now consider the long run in which scooter 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 scooters on the following graph. demand price (dollars per scooter) quantity (scooters) demand which of the following statements are true for both monopolistically competitive markets and monopoly markets? check all that apply. price equals average total cost in the long run. firms are not price takers. price is above marginal cost. firms can earn positive profit in the long run.

Given the profit-maximizing choice of output and price in the monopolistically competitive market, Citrus Scooters is earning positive profit, which means there are few sellers in the industry relative to the long-run equilirbium amount.

Both monopolistically competitive market and monopoly market are experiencing:

Price is above marginal cost
Firms are not price takers
Price equals average total cost in the long run

Please refer to the first graph.

On the first graph, the green area represents the short-run profit. The graph shows that Citrus Scooter will be able to earn positive profit in the short-run.

However since the entry and exit barriers are low, many firms may come and go in the market. Resulting in the movement of the demand curve.

Please refer to the second graph.

When a new firm enter or quit the market, the demand curve will shift aligned with the shifting of the supply demand. When a firm enter the market and shift the supply curve to the right, the industry demand curve will shift to the right, but the firm's demand curve will shift to the left since customers have wider options and might choose to change products. It shows that the firm's market share decreases when a new firm enter the market.

Hence, both monopolistically competitive market and monopoly market experience similar events:

Firms in both markets can earn no profit in the long-run. Monopolistically competitive firm has to keep upgrading its product differentiations to earn positive profits, meanwhile monoplistic firm has to relay on the market demand level to change its product price and aims to earn profit.
The price set by both firms is above the marginal cost.
Firms in both markets are price makers since they decide the price for their product despite the market driven price.
Price in both markets in the long run will be equals to the firm's average total cost, resulting the company with no profit conditions.

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