In monopolistic competition,firms making substantial profits tend to be emulated,this shrinks the once substantial profits,because when _____,there are no profits.
A) Marginal revenue equals average revenue
B) Average total cost equals average fixed cost
C) Average revenue equals marginal cost
D) Marginal revenue equals average total cost
E) Average revenue equals average total cost

Question

Quizplus · Accepted Answer

In monopolistic competition, firms earn zero economic profit in the long run because new firms enter the market, increasing competition and driving down prices until average revenue equals average total cost.

In Monopolistic Competition,firms Making Substantial Profits Tend to Be Emulated,this