When monopolistically competitive firms earn ________ economic profits, other firms ________ an industry in the long run.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, when firms earn positive economic profits, it signals new entrants that there are opportunities for profit, leading them to enter the industry. This entry continues until profits are driven down to zero in the long run.

When Monopolistically Competitive Firms Earn ________ Economic Profits, Other Firms