In the long run, a representative firm in a monopolistically competitive industry will end up

Question

Quizplus · Accepted Answer

In the long run, firms in a monopolistically competitive market will enter or exit the market until only normal profits are earned, eliminating economic profits due to the free entry and exit of firms. This adjustment ensures that firms earn just enough to cover their costs, including the opportunity cost of capital, leading to normal profit but not economic profit.

In the Long Run, a Representative Firm in a Monopolistically