The assumption that precludes economic profits in monopolistic competition in the long run is that
A)there are many buyers and sellers.
B)the firms produce a homogeneous product.
C)there is easy entry and exit in this market structure.
D)buyers and sellers have all relevant information.

Question

Quizplus · Accepted Answer

The assumption that precludes economic profits in monopolistic competition in the long run is easy entry and exit in the market structure. This ensures that any economic profits are competed away over time as new firms enter the market, attracted by the profits.

The Assumption That Precludes Economic Profits in Monopolistic Competition in the Long