Perfect competition and monopolistic competition are similar in this one respect:
A) firms make zero economic profit in the long run
B) firms produce at the lowest point on their ATC curves
C) there are few firms in each industry
D) entry is difficult
E) firms produce differentiated products

Question

Quizplus · Accepted Answer

In both perfect competition and monopolistic competition, firms make zero economic profit in the long run due to free entry and exit in the market. This drives economic profits to zero as new firms enter the market when there are profits, and leave when there are losses.

Perfect Competition and Monopolistic Competition Are Similar in This One