In the long run, firms in a monopolistically competitive industry will
A) achieve a price equal to the minimum point on the LRATC curve.
B) generate no deadweight loss.
C) achieve profits equal to a monopoly firm.
D) earn zero economic profit.

Question

Quizplus · Accepted Answer

In the long run, firms in a monopolistically competitive industry will earn zero economic profit due to the entry and exit of firms, which drives profits to zero. This is because new firms will enter the market when they see existing firms making a profit, increasing supply and competition until profits are eliminated.

In the Long Run, Firms in a Monopolistically Competitive Industry