In the long run,firms in monopolistic competition make zero economic profit because
A) firms are free to enter and exit.
B) their products are similar but slightly different.
C) of over-reliance on product marketing.
D) of collusion among the various sellers.
E) their demand curves are horizontal.

Question

Quizplus · Accepted Answer

Firms in monopolistic competition make normal profit in the long run because there are no barriers to entry or exit, meaning that if firms were earning economic profits, new firms could enter the market and compete, driving down prices and reducing profits until they are only earning normal profit.

In the Long Run,firms in Monopolistic Competition Make Zero Economic