Exhibit 9-1 A monopolistic competitive firm

-As represented in Exhibit 9-1,the maximum long-run economic profit earned by this monopolistic competitive firm is:

Question

Exhibit 9-1 A monopolistic competitive firm
 
-As represented in Exhibit 9-1,the maximum long-run economic profit earned by this monopolistic competitive firm is:

Quizplus · Accepted Answer

In the long-run, a monopolistic competitive firm will experience entry and competition from other firms, which will drive down demand for their product and reduce their economic profit. Eventually, the firm will settle at a point where their economic profit is zero, which is represented by the intersection of the average total cost curve and the demand curve at the "long-run equilibrium" point in the exhibit. Therefore, the maximum long-run economic profit earned by this firm is zero.

Exhibit 9-1 a Monopolistic Competitive Firm