Which statement is TRUE?
A)All markets should be oligopolies because that is the most efficient market structure.
B)Monopolistic competition results in excess capacity since,in the long run,the point where MR = MC is to the right of the minimum of the ATC curve.
C)In monopolistic competition,firms earn large economic profits in the long run.
D)In monopolistic competition,firms earn zero economic profits in the long run.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms earn zero economic profits in the long run because new firms enter the market when they see existing firms making profits, increasing competition until profits are eliminated.

Which Statement Is TRUE