In the long run, in monopolistic competition:

Question

Quizplus · Accepted Answer

In the long run, monopolistic competition leads to zero economic profits. This occurs because, in the long run, new firms enter the market, attracted by the profits that existing firms are making. As more firms enter, each firm's market share decreases, leading to a decline in demand and prices. As prices decline, so do the profits of individual firms, eventually leading to zero economic profits in the long run. Therefore, option E is the correct answer.

In the Long Run, in Monopolistic Competition