Successful monopolistically competitive firms
A) generally earn higher profit than monopolists.
B) earn economic profits in the short run only.
C) earn economic profits in the long run only.
D) are able to drive their competitors out of business.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms can earn economic profits in the short run due to product differentiation and brand loyalty. However, in the long run, the entry of new firms erodes these profits, leading to normal profit equilibrium.

Successful Monopolistically Competitive Firms