What is the level of economic profits earned by a firm operating in the short-run under conditions of monopolistic competition?

Question

Quizplus · Accepted Answer

In the short-run, a firm operating in monopolistic competition can earn positive or negative economic profits depending on the demand for its product and the level of competition it faces. If the demand is high and the firm can differentiate its product sufficiently, it can charge a higher price and earn positive economic profits. However, if the demand is low or the competition is intense, the firm may have to lower its price and face higher costs, leading to negative economic profits. Therefore, option B is the best choice.

What Is the Level of Economic Profits Earned by a Firm