In long-run equilibrium,a monopolistically competitive industry is characterized by

Question

Quizplus · Accepted Answer

In the long-run equilibrium of monopolistically competitive industry, firms are achieving zero economic profits. This happens because in the long run, firms can freely enter or exit the industry, which leads to an increase in competition and a decrease in demand for each individual firm, reducing their market power and profits. Therefore, option C is the correct answer. Option A is incorrect because in the long-run, firms cannot sustain positive profits. Option B is incorrect because a monopolistically competitive firm faces a downward-sloping demand curve, meaning it cannot have a perfectly elastic demand curve. Option D is incorrect because monopolistic competition does not have barriers to entry. Option E is incorrect because not all firms will necessarily have the same minimum point on the long-run average cost curve.

In Long-Run Equilibrium,a Monopolistically Competitive Industry Is Characterized by