Exhibit 10.4

-Exhibit 10.4 shows the demand,marginal revenue,and cost curves for a monopolistic competitor.In the long run,the firm can expect:

Question

Exhibit 10.4
 
-Exhibit 10.4 shows the demand,marginal revenue,and cost curves for a monopolistic competitor.In the long run,the firm can expect:

Quizplus · Accepted Answer

In the long run, a monopolistic competitor will earn zero economic profit as the market entry and exit will drive the price down to the level of average total cost. Thus, the firm will not earn any economic profit but will continue to operate in the market. In this case, the demand and cost curves intersect at a quantity where the average total cost is equal to the price, indicating zero economic profit. Therefore, option C is the best choice.

Exhibit 10.4 -Exhibit 10.4 Shows the Demand,marginal Revenue,and Cost Curves for a Cost