Under a monopolistically competitive market structure,firms will continue to enter the market until the economic profit is eliminated.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market structure, firms will keep entering the market until the economic profit is eliminated because there are no significant barriers to entry. However, in the long run, each firm will end up producing at a point where the marginal cost equals the marginal revenue, and there will be zero economic profit. This means that firms in monopolistically competitive industries will continue to operate, but they will earn normal profits instead of economic profits.

Under a Monopolistically Competitive Market Structure,firms Will Continue to Enter