Unlike the situation for a firm in perfect competition, positive economic profit exists for firms in monopolistic competition for both the short run and in the long run.

Question

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In the long run, firms in monopolistic competition will face competition from new firms entering the market, driving down demand for their products and ultimately lowering their economic profit. In the long run, firms in monopolistic competition will only earn a zero economic profit as in the case of perfect competition.

Unlike the Situation for a Firm in Perfect Competition, Positive