Monopolistic competition is similar to
A)perfect competition, in that firms face downward-sloping demand curves and earn zero long-run economic profit
B)pure monopoly, in that firms face downward-sloping demand curves and can earn economic profits both in the short run and in the long run
C)perfect competition, in that firms face perfectly elastic demand curves and earn zero long-run economic profit
D)pure monopoly, in that firms can earn economic profits both in the short run and in the long run, and similar to perfect competition, in that firms face perfectly elastic demand curves
E)pure monopoly, in that firms face downward-sloping demand curves, and similar to perfect competition, in that long-run economic profit is zero

Question

Quizplus · Accepted Answer

In monopolistic competition, firms face downward-sloping demand curves like a monopoly, but in the long run, they earn zero economic profit due to free entry and exit, similar to perfect competition.

Monopolistic Competition Is Similar to