Monopolistic competitors can make a in the short-run, but in the long run,
Will drive these firms toward .
A) profit or loss; entry and exit; a zero-profit outcome
B) loss; exit; losses on their earnings
C) profit or loss; exit; economic profits
D) profit; entry; a price that lies at the very bottom of the AC curve

Question

Quizplus · Accepted Answer

Monopolistic competitors can indeed make a profit or a loss in the short run, but the process of entry and exit in the market will drive these firms toward a zero-profit outcome in the long run, as new firms enter the market if existing firms are making profits, and firms will exit if they are making losses, leading to a situation where firms earn just enough to cover their costs.

Monopolistic Competitors Can Make a in the Short-Run, but in the Long