Over the long run, a monopolistic competitor will:
A) break even and operate as efficiently as a pure competitor.
B) break even and operate less efficiently than a pure competitor.
C) earn excess profit and operate as efficiently as a pure competitor.
D) earn excess profit and operate less efficiently than a pure competitor.

Question

Quizplus · Accepted Answer

In the long run, a monopolistic competitor will break even due to the entry of new firms attracted by short-term profits, but it will operate less efficiently than a pure competitor due to product differentiation and lack of perfect competition.

Over the Long Run, a Monopolistic Competitor Will