Which of the following is true regarding the long run for a firm in monopolistic competition?

Question

Quizplus · Accepted Answer

In the long run for a firm in monopolistic competition, new firms can enter the market, leading to increased competition and lower demand for each firm's product. This results in a decrease in the firm's market share and economic profit. Therefore, the firm's economic profit equals zero in the long run. Choice A is not necessarily true in monopolistic competition as firms have some market power to set prices above their marginal cost. Choice C is not necessarily true as the firm may not be operating at the minimum point of its average total cost curve in the long run. Choice D is not necessarily true as the relationship between marginal cost and average total cost depends on the shape of the firm's cost curves.

Which of the Following Is True Regarding the Long Run