In the long run, monopolistically competitive firms tend to experience:

Question

Quizplus · Accepted Answer

In the long run, monopolistically competitive firms tend to experience zero economic profits. This is because in the long run, firms can enter or exit the industry in response to profits or losses, which will lead to more firms entering and competition increasing. As a result, the demand for each firm's product will decrease and the firm's market power will decrease as well. This will eventually lead to the firm earning only enough revenue to cover its cost, resulting in zero economic profits.

In the Long Run, Monopolistically Competitive Firms Tend to Experience