Which of the following is true about a monopolistically competitive firm?
A)It can earn an economic profit in the short run, but not the long run.
B)It can earn an economic profit in the short run and the long run.
C)It can earn an economic profit in the long run, but not the short run.
D)It cannot earn a economic profit in either the short or long run.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms can earn economic profits in the short run due to product differentiation and brand loyalty. However, in the long run, the entry of new firms erodes these profits, leading to a situation where firms can only earn normal profits.

Which of the Following Is True About a Monopolistically Competitive