A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.

Name: A firm in a monopolistically competitive market can earn short-run profits but not long-run profits.
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Question

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

A Firm in a Monopolistically Competitive Market Can Earn Short-Run