In monopolistic competition, because of product differentiation the firm can make a profit in the long-run.

Question

Quizplus · Accepted Answer

Monopolistic competition allows firms to differentiate their products from competitors, which can create a sense of brand loyalty and allow the firm to charge a slightly higher price. This can lead to economic profits in the long-run. However, as more firms enter the market and create similar differentiated products, the profitability of the firm may decrease.

In Monopolistic Competition, Because of Product Differentiation the Firm Can