In long-run equilibrium,a typical monopolistically competitive firm will

Question

Quizplus · Accepted Answer

In long-run equilibrium, a monopolistically competitive firm will earn a normal profit. This is because in the long-run, new firms will enter the industry, increasing competition and reducing the demand for existing firms' products. As a result, the firm's demand curve shifts leftward, reducing its market power and its ability to charge a price above its marginal cost. The firm will continue to produce as long as it covers its average total cost, earning only a normal profit.

In Long-Run Equilibrium,a Typical Monopolistically Competitive Firm Will