The monopolistically competitive firm earns zero economic profit in the long run.

Name: The monopolistically competitive firm earns zero economic profit in the long run.
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Question

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In the long run, the entry and exit of firms in a monopolistically competitive market will cause demand to shift downwards, leading to lower prices and lower profits for firms. As a result, firms in monopolistically competitive markets will earn zero economic profit in the long run, but will still earn normal profits.

The Monopolistically Competitive Firm Earns Zero Economic Profit in the Long