In the long run,monopolistically competitive firms:
A)produce at the level that minimizes average total cost.
B)set marginal revenue equal to price.
C)cannot earn an economic profit.
D)produce such that marginal cost equals price.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms cannot earn an economic profit in the long run due to competition from other firms with similar products. This is because consumers have a variety of substitutes to choose from, which limits the price the firm can charge and reduces the demand for their product. As a result, firms in monopolistically competitive markets will only earn normal profits (i.e. zero economic profit) in the long run.

In the Long Run,monopolistically Competitive Firms