In the long run,the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to
A)continue its efforts to differentiate its product.
B)raise its price.
C)lower its price.
D)do nothing,because it will inevitably experience a decline in profits.

Question

Quizplus · Accepted Answer

The most effective way for a monopolistically competitive firm to maintain its economic profit in the long run is to continue its efforts to differentiate its product. By making their product distinct from the competition, the firm creates a loyal customer base and reduces the price sensitivity of their customers, giving them more flexibility in pricing. This helps them maintain their market power and protect their economic profits. Raising prices may lead to decreased demand and lower profits, while reducing prices would lower profitability. Doing nothing would lead to increased competition and a decline in profits.

In the Long Run,the Most Helpful Action That a Monopolistically