In the long run,monopolistically competitive firms tend to have:
A)high economic profits.
B)zero economic profits.
C)negative economic profits.
D)substantial economic losses.

Question

Quizplus · Accepted Answer

In the long run, monopolistically competitive firms tend to have zero economic profits. This is because entry and exit of firms can occur, leading to a decrease in demand for the products of existing firms and a decrease in their market share. As a result, firms will need to lower their prices to attract customers and maintain their market share, which ultimately leads to zero economic profits.

In the Long Run,monopolistically Competitive Firms Tend to Have