Which of the following characterizes monopolistic competition?
A)Price leadership.
B)Zero long-run profit.
C)Retaliation.
D)Marginal cost pricing.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by the ability of firms to earn positive economic profits in the short run but only normal profits in the long run due to easy entry and exit. Therefore, zero long-run profit is a defining characteristic of monopolistic competition. Price leadership, retaliation, and marginal cost pricing are not necessarily specific to monopolistic competition.

Which of the Following Characterizes Monopolistic Competition