If a monopolist cannot make an above normal profit entry by

Solution

false.

The entry of new firms leads to an increase in the supply of differentiated products, which causes the firm\'s market demand curve to shift to the left. As entry into the market increases, the firm\'s demand curve will continue shifting to the left until it is just tangent to the average total cost curve at the profit maximizing level of output, At this point, the firm\'s economic profits are zero, and there is no longer any incentive for new firms to enter the market. Thus, in the long?run, the competition brought about by the entry of new firms will cause each firm in a monopolistically competitive market to earn normal profits.