If firms in a monopolistically competitive market are earning economic profits greater than zero in the short run, then in the long run

Question

Quizplus · Accepted Answer

In the long run, the entry of new firms attracted by the economic profits will increase competition, leading to a decrease in each firm's market share and demand for its product. This increased competition will drive prices down, reducing profits towards zero.

If Firms in a Monopolistically Competitive Market Are Earning Economic