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Figure: The Market for Gas Stations
-(Figure: The Market for Gas Stations) Look at the figure The Market for Gas Stations. This market is characterized by many firms, differentiated products, easy entry, and easy exit. In long-run equilibrium, the economic profit earned by the typical gas station will be:
A) equal to the level shown in the figure.
B) negative.
C) zero.
D) Not enough information is given to answer the question.

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Use the following to answer questions:
Figure: The Market for Gas Stations 
-(Figure: The Market for Gas Stations) Look at the figure The Market for Gas Stations. This market is characterized by many firms, differentiated products, easy entry, and easy exit. In long-run equilibrium, the economic profit earned by the typical gas station will be:
A) equal to the level shown in the figure. 
B) negative. 
C) zero. 
D) Not enough information is given to answer the question.

Quizplus · Accepted Answer

In a market with many firms, differentiated products, and easy entry and exit, such as monopolistic competition, firms will earn zero economic profit in the long run due to the entry of new firms eroding any short-term profits.

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