1. If an incumbent monopolist supplies Q. at price P
If an incumbent monopolist supplies Q* at price P*, then entry is unprofitable-- the residual demand curve lies everywhere below LAC $
The sustainable case  P*
LAC
Residual demand D
Quantity Q*

2. $ LAC J K N demand Q1 Q2 Q3 Quantity
An entrant can offer output Q2 at price P2 and earn a normal profit. Hence entry is profitable even though it is socially inefficient
The unsustainable case
Be aware that the cost function is subadditive at Q3 $
LAC J K P3 P2 P1 N
demand Q1 Q2 Q3
Quantity