Monopolistically competitive firms have zero economic profits in the long run because of:

Question

Quizplus · Accepted Answer

Monopolistically competitive firms have zero economic profits in the long run primarily due to easy entry and exit in the market. When firms in such a market are making economic profits, new firms are attracted to enter the market, increasing the supply of products and driving down prices and profits until only normal profits are made.

Monopolistically Competitive Firms Have Zero Economic Profits in the Long