In theory, in the long run, monopolistically competitive firms earns zero profits. However, in reality there are some ways by which a firm can avoid losing profits. Which of the following is one such way?
A) gradually increase the mark-up on the goods produced
B) lower the price of its products to expand its market share
C) identify new markets and develop products precisely for those markets
D) find a market niche and keep it as narrow as possible so as to prevent other producers from entering this market segment

Question

Quizplus · Accepted Answer

By identifying new markets and developing products specifically for those markets, a firm can differentiate itself and maintain a competitive edge, potentially allowing it to earn profits even in a monopolistically competitive market.

In Theory, in the Long Run, Monopolistically Competitive Firms Earns