Why can't an economist say for certain that a monopolistic competitive firm will always earn zero economic profits in the long run?
A)Barriers to entry are significant in monopolistic competition.
B)The very large number of buyers indicates that there will always be demand for the firm's product.
C)The firms in the industry do not produce identical products.
D)The firms practice price competition, so at least some firms will always be charging a lower price than other firms and will sell more as a result.
E)The firms face a horizontal demand curve.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms produce differentiated products, which allows them to have some degree of market power and potentially earn positive economic profits in the long run, unlike in perfect competition where products are identical.

Why Can't an Economist Say for Certain That a Monopolistic