In long-run equilibrium in a monopolistically competitive market,firms typically:
A) earn a normal profit.
B) charge a price equal to marginal cost.
C) earn an above-normal profit.
D) charge a price equal to marginal revenue.

Question

Quizplus · Accepted Answer

In long-run equilibrium, in a monopolistically competitive market, firms typically earn a normal profit. This is because entry into the market is relatively easy, and firms cannot sustain above-normal profit in the long run due to increased competition. Therefore, firms will adjust their price and output levels until they are earning only a normal profit.

In Long-Run Equilibrium in a Monopolistically Competitive Market,firms Typically