Which of the following scenarios best represents a firm operating under monopolistic competition and illustrates why it can sustain economic profit in the short run?

In monopolistic competition, many firms sell similar but not identical products, which gives them some control over pricing. For example, consider a local coffee shop that offers unique flavors and a cozy atmosphere, setting it apart from other coffee shops. In the short run, if this coffee shop attracts many customers and manages to charge a higher price than its costs, it can earn economic profits. However, these profits attract new competitors who want to enter the market, leading to more choices for consumers. Eventually, the economic profits will decrease as competition increases and prices stabilize, but in the short run, the coffee shop benefits from its unique offerings.