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3. How short-run profit or losses induce entry or exit CitrusScooters is a company that manufactures electric scooters in amonopolistically competitive market. The following graph shows thedemand curve, marginal revenue curve (MR), marginal cost curve(MC), and average total cost curve (ATC) for Citrus. Place theblack point (plus symbol) on the graph to indicate the short-runprofit-maximizing price and quantity for this monopolisticallycompetitive company. Then, use the green rectangle (trianglesymbols) to shade the area representing the company's profit orloss. Monopolistically Competitive OutcomeProfit orLoss050100150200250300350400450500500450400350300250200150100500PRICE(Dollars per scooter)QUANTITY (Scooters)DemandMRMCATC Given theprofit-maximizing choice of output and price, Citrus Scooters isearning ??profit, which means there are??sellers in the industry relative to the long-runequilibrium amount. Now consider the long run in which scootermanufacturers are free to enter and exit the market. Show thepossible effect of this free entry and exit by shifting the demandcurve for a typical individual producer of scooters on thefollowing graph. DemandPRICE (Dollars per scooter)QUANTITY(Scooters)Demand??? Which of the followingstatements are true for both monopolistically competitive marketsand monopoly markets? Check all that apply. Firms earn zero profitin the long run. Firms can earn positive profit in the long run.Firms are not price takers. Price is above marginal cost.

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