If a firm in monopolistic competition is making an economic profit,
A) it is in the long run.
B) other firms can enter the market.
C) it can do so because it is "monopolistic" and other firms will have a hard time competing with it.
D) its average cost must exceed its marginal cost.
E) The question errs because firms in monopolistic competition cannot make an economic profit.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms can easily enter the market, so if a firm is making an economic profit, it is likely that other firms will enter and compete, driving down the profits.

If a Firm in Monopolistic Competition Is Making an Economic