In the short run, a monopolistically competitive firm can earn

Question

Quizplus · Accepted Answer

In the short run, a monopolistically competitive firm can earn zero, positive, or negative profits depending on the level of demand and cost conditions. If demand is high and costs are low, the firm can earn positive profits. If demand is low and costs are high, the firm can incur losses and earn negative profits. If demand and costs are balanced, the firm can earn zero profits. Therefore, option D is the best choice as it encompasses all possible outcomes.

In the Short Run, a Monopolistically Competitive Firm Can Earn