Answer:
D) decrease and average total cost to increase.
Explanation:
A monopolistically competitive firm is not a monopoly, it operates in a market where there are many producers and consumers, but each producers supplies a differentiated product, e.g. restaurants.
The demand curve of a monopolistically competitive market is downward sloping. In the short run a firm can make economic profit by selling its goods at a higher price, but in the long run the demand curve will be tangent to the firm's average total cost. At this point the firm will no longer produce economic profit (not the same as accounting profit), similarly to what happens to firms that compete in perfectly competitive markets.
