Which of the following is uncharacteristic of monopolistic competition in the long run?
A) firms selling heterogeneous products
B) zero economic profits
C) price in excess of marginal revenue
D) equilibrium on the increasing portion of the average total cost curve

Question

Quizplus · Accepted Answer

In the long run, firms in monopolistic competition will experience zero economic profits due to the ease of entry and exit in the industry, leading to an increase in competition. However, firms will still sell heterogeneous products and set prices above marginal cost, leading to equilibrium on the downward-sloping portion of the average total cost curve, not the increasing portion.

Which of the Following Is Uncharacteristic of Monopolistic Competition in the Long