-In the long run in monopolistic competition, firms
A) make zero economic profit.
B) shut down if they are making zero economic profit.
C) incur an economic loss.
D) make either an economic profit or zero economic profit.
E) can make an economic profit.

Question

-In the long run in monopolistic competition, firms
A) make zero economic profit. 
B) shut down if they are making zero economic profit. 
C) incur an economic loss. 
D) make either an economic profit or zero economic profit. 
E) can make an economic profit.

Quizplus · Accepted Answer

In the long run in monopolistic competition, firms make zero economic profit due to the entry and exit of firms in the market until there is no incentive for new firms to enter or for existing firms to exit, leading to a situation where firms just cover their average costs, including a normal profit.

-In the Long Run in Monopolistic Competition, Firms